BRITAIN'S battered economy is preparing for a return to growth in the fourth quarter of this year after suffering its longest recession since the Second World War, according to a poll of economists.
Policymakers have been hoping the weak pound could encourage an export-led recovery and help re-balance Britain's economy. Forecasts from 30 economists polled for Reuters show that the economy will grow 0.4 per cent in the current quarter and continu
e growing between 0.3 and 0.5 per cent well into 2011.
The news comes as British house prices jumped last month, retail sales notched up their best October in seven years and car imports leapt at their fastest rate since 1996, all suggesting a consumer-led recovery may not be far off.
The Bank of England will publish its quarterly inflation report today, which is expected to show the central bank will hit its 2 per cent target and that growth will return in the medium term.
The forecasts will underpin the monetary policy committee's decision to halve the size of its latest cash injection to £25 billion from the unexpectedly generous £50bn it pumped into the economy between August and October.
Growth is seen dipping early next year as the government raises VAT and the car scrappage scheme ends but median forecasts give only a 30 per cent chance of a double-dip recession, in line with a poll taken last month.
Azad Zangana, an analyst at Schroders, said: "Historically, the UK has been prone to double-dip recessions, though thanks to the unprecedented support from the Bank of England, we do not expect one this time."
The outlook for the UK compares equally with the eurozone, which is also expected to grow 1.1 per cent next year, but behind the United States which is seen bouncing back to 2.5 per cent growth on an annualised basis.
John Hawksworth at PwC said: "We think there will be a modest recovery in GDP over the next year, but growth… will not prevent unemployment rising."
Despite growth predicted for the economy, the outlook for the job market is less rosy as firms continue to slash jobs in a bid to cut costs and stay afloat and unemployment is seen peaking at 9.5 per cent in 2011, in line with the previous poll.
Official data due to be released today is expected to show unemployment was at 8 per cent in September, up from August's 7.9 per cent, and suggest the Bank of England is unlikely to move on interest rates any time soon.
Analysts also say today's Bank of England's report will show inflation picking up sharply in the near term but returning to target in two years if rates follow market expectations, a higher profile than in August, when inflation was seen below target.
The growth forecast, by contrast, is likely to be little changed from August, showing the economy picking up to return to growth at some point in 2010.
Some analysts reckon the forecasts will suggest a pause in the asset purchase programme once the current £200bn runs out in February, but most see rates staying at their record low of 0.5 per cent until well into 2010.
