Bank of England governor Andrew Bailey has said it “hangs in the balance” whether the UK entered a technical recession or not towards the back end of last year.
Ahead of gross domestic product (GDP) figures due on Thursday morning, Bailey told the Lords Economic Affairs Committee that a second consecutive period of negative growth could be on the cards.
“In our February Monetary Policy Report it was frankly in the balance,” he said
“We didn’t have a recession in the forecast but it is at best flat. It wouldn’t take much to tip it either way frankly.”
Economists have forecast a 0.1% fall in GDP over the final quarter to December, which would follow another 0.1% decline between July and September.
This would see the UK dip into recession for the first time since the pandemic, or since 2009 when not accounting for Covid-19-related lockdown measures.
Commenting on Tuesday morning’s inflation reading of 4% for January Bailey added: “As far as I can tell [...] that amount of downward movement was pretty broad-based - a bit of it in energy, some in food but also some of in services as well, so that’s quite encouraging.”
“It leaves us broadly where we thought we were going to be but that’s obviously encouraging compared to where we could have been.”