PracticeAccounting FirmsE&Y economic advisor heaps scorn on recession figures

E&Y economic advisor heaps scorn on recession figures

An economic advisor at Ernst & Young's ITEM Club has reacted with "disbelief" to figures from the ONS

A SENIOR economic advisor at Ernst & Young’s ITEM Club has reacted with disbelief to figures that show the UK economy has returned to recession.

According to figures from the Office for National Statistics released today, the economy shrunk by 0.2% in the first three months of the year, coming on the back of the 0.3% decline at the end of last year

A 3% decline in the construction sector was behind the contraction, the ONS said.

“The initial reaction to these figures must be one of disbelief,” said Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club.

“The divergence between the stronger survey data and dire official output estimates is virtually unprecedented and must raise significant question marks over the quality of the data. The construction figures are an obvious source of bewilderment, but the services data also looks highly questionable given what we already knew about the early part of the quarter. Certainly the impression that we have from talking to businesses is the UK economy is not in recession.”

Goodwin added that he would be “very surprised” if the figures were not revised upwards substantially over the coming months.

KPMG’s chief economist, Andrew Smith, said output is expected to remain weak in the second quarter and with extra holidays, the Jubilee and the Olympic Games distorting the picture over the summer.

“It will be some time before the underlying picture is clear. But even if activity recovers in the second half, overall this looks like being – at best – another year of weak growth, held back by squeezed real incomes and public spending cuts. Recovery postponed (again),” Smith said.

Related Articles

KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

Accounting Firms FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

3m Emma Smith, Managing Editor
Deloitte rises in auditor rankings with most FTSE 250 clients

Accounting Firms Deloitte rises in auditor rankings with most FTSE 250 clients

3m Alia Shoaib, Reporter
Partner joins BDO from KPMG

Accounting Firms Partner joins BDO from KPMG

3m Alia Shoaib, Reporter
EY hired by Carillion to review finances

Accounting Firms EY hired by Carillion to review finances

5m Alia Shoaib, Reporter
Introduction to KPMG UK’s new leadership team

Accounting Firms Introduction to KPMG UK’s new leadership team

6m Emma Smith, Managing Editor
FRC launches investigation into KPMG’s Rolls-Royce audit

Accounting Firms FRC launches investigation into KPMG’s Rolls-Royce audit

8m Emma Smith, Managing Editor
The importance of investing in people

Accounting Firms The importance of investing in people

9m Emma Smith, Managing Editor