Preliminary Q2 GDP Much Worse Than Expected!

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Preliminary Gross Domestic Product (GDP) growth in the second quarter of 2012 was -0.7% on the previous quarter according to official figures released today - much worse than even the most pessimistic forecasts.  The UK has now had three consecutive quarters of negative GDP growth (the previous two quarters were both -0.3% changes).

None of the three professors in our Clash of the Titans competition were close to correct predictions, with even Danny Quah, by far the most pessimistic of the three, forecasting no change in GDP this past quarter. This has led to no overall change in the leaderboard, but LSE have closed the gap slightly as Professor Quah was the closest to getting it right.

In fact, this very low figure seems to have surprised everyone, with only 11 of our 214 forecasters predicting a Q2 growth rate of -0.7% or worse.  This has led to some big changes in the individual standings.  The UK economy is in a strange state at the moment; while GDP growth is much worse than most expected, inflation and unemployment are both generally better than expected.  However, unemployment has a tendency to lag behind GDP growth, and any efforts by the Bank of England to boost GDP will likely lead to increases in inflation too, so the current situation probably won't last.

The next important figure for the Clash of the Titans competition is second quarter unemployment, released on the 15th August.  Preliminary figures from this month suggest it is still falling (8.1% is the latest number), so all three professors might well have gone too high with their predictions. Professor Muellbauer from Oxford looks best placed to solidify his lead, however, with the lowest forecast of the three at 8.3%.