LONDON (Reuters) - The British economy bounced out of the longest recession on record in the last quarter of 2009 but is not seen making any dramatic move over the coming year as stimulus packages are gradually removed, a Reuters poll showed.
Median forecasts from the survey, taken over the past week, showed they expect the UK economy to have grown 0.4 percent in the fourth quarter, ending the country’s worst downturn since the Second World War -- but later than the rest of the world’s richest nations.
The poll of around 40 economists predicted the recovering economy would grow at a somewhat tepid 0.5 percent per quarter from April well into 2011, virtually the same as predicted in last month’s poll.
Economists dramatically chopped their expectation for the peak unemployment rate to an average of 8.5 percent in the final quarter of 2010 from 9.5 expected in early 2011 in a poll taken in October.
Official data released on Wednesday showed Britain’s labour market showed some sign of stabilisation at the end of last year, with the jobless rate nudging down to 7.8 percent for the three months to November from October’s 7.9 percent.
“Though we believe the UK exited recession in the final quarter of 2009, we remain cautious over the strength of the recovery. Look for the tortoise rather than the hare,” said Azad Zangana at Schroders Investment Management.
The poll was largely taken before data released on Tuesday showed British inflation saw its biggest one-month jump in the annual rate on record in December, surprising markets. But that rise to 2.9 percent was largely due to an unflattering comparison with a year earlier.
Inflation is seen averaging 2.4 percent this year and 1.6 percent next year, according to median forecasts, leapfrogging the Bank of England’s 2.0 percent target, and compares to last month’s prediction for 2.1 percent in 2010.
The Bank of England has slashed interest rates to near-zero and so far has said it will spend 200 billion pounds on its quantitative easing programme of buying government bonds in an effort to boost the economy.
Minutes released on Wednesday showed the nine members of the Monetary Policy Committee was unanimous in leaving policy unchanged this month.
The bank is not expected to raise rates until October at the earliest, a separate Reuters poll of over 60 analysts found, in line with a poll taken at the end of last month.
“While quantitative easing looks unlikely to be extended next month any tightening of policy is still some way off,” said Vicky Redwood at Capital Economics.
Data released late last year showed the UK economy shrank by 0.2 percent in the third quarter, the sixth consecutive quarterly contraction and confounding expectations for growth.
Medians show economists expect the UK economy to have shrunk 4.7 percent last year but see it growing 1.2 percent this year and by 2.1 percent in 2011, little changed from last month’s poll.
That is similar to 2010 forecasts for the euro zone, but well behind the United States which is seen notching up growth of 2.7 percent.
Forecasts for the year ahead were relatively wide, highlighting the uncertainty in markets, ranging from 0.3 to 2.2 percent.
Polling by Bangalore Polling Unit; Editing by Andy Bruce
Our Standards: The Thomson Reuters Trust Principles.