Revised national accounts figures show that there was no “double dip” in late 2011 / early 2012 but the output / inflation trade-off in recent years has been even more unfavourable than previously thought – news that should give pause to advocates of further monetary stimulus.
 
Key points:

• GDP is now estimated to have flatlined in the first quarter of 2012 after a 0.1% fall in the fourth quarter of 2011 – previous numbers showed a 0.1% decline in both quarters.

• The onshore economy avoided contraction over this period – the GDP decline in late 2011 was entirely due to lower North Sea production.

• GDP in the first quarter of 2013 was 3.9% lower than the pre-recession peak reached in the first quarter of 2008 – much worse than a previously-estimated 2.6% shortfall.

• The wider gap mainly reflects a larger fall in GDP during the 2008-09 recession – 7.2% versus 6.3%. The recovery in output from the 2009 trough is only slightly weaker than before – 3.5% versus 3.9%.

• The deeper recession, however, has been counterbalanced by an upward revision to inflation, leaving growth in current-price GDP between 2008 and today little changed. The supply-side performance of the economy, in other words, looks even more dismal.

• Revisions to recent quarterly data were minor and do not alter the optimistic prognosis here – the current estimate of a 0.8% rise in GDP in the second quarter will be refined in light of April services output to be released tomorrow and May numbers for industry and construction due on 9 and 12 July respectively.