Britain to emerge from recession in current quarter

By Jonathan Cable

LONDON (Reuters) - The British economy probably bounced back to growth in the current quarter from the longest downturn on record, though the chances of a double-dip recession remain significant, according to a Reuters poll.

The median forecasts of around 30 economists, questioned over the past week in the Reuters monthly UK survey, showed they expected dire third quarter numbers to be confirmed but the economy would grow 0.4 percent in the current quarter.

Preliminary data released last month showed the UK economy contracted 0.4 percent in the third quarter, confounding expectations for growth, quashing hopes the downturn had ended and marking the sixth successive quarter of contraction, the longest unbroken string since records began in 1955.

Economists in the latest poll predict the battered economy will swing to growth of 0.4 percent in the fourth quarter and continue growing between 0.3 and 0.5 percent well in to 2011.

Growth is seen dipping early next year as the government raises consumption tax and a car scrappage scheme ends but median forecasts give only a 30 percent chance of a double-dip recession, in line in a poll taken last month.

"Historically, the UK has been especially prone to double-dip recessions, though thanks to the unprecedented support from the Bank of England, we do not expect one this time," said Azad Zangana at Schroders.

The central bank has slashed rates to near-zero and said on Thursday it was expanding its quantitative easing programme of buying government bonds outright by 25 billion pounds to 200 billion pounds, to resuscitate the battered economy.

Median forecasts from around 40 economists see the economy shrinking 4.7 percent this year and then growing 1.1 percent in 2010, compared to a 4.4 percent contraction and 1.1 percent growth predicted respectively in October's poll.