Think tank says UK back in recession

The Centre for Economics and Business Research (CEBR) says the UK has 'double-dipped' back into recession and predicts interest rates won't rise until 2016, reports The Telegraph.

CEBR believes the economy actually shrank during the final quarter of last year and is still contracting. The economy is considered to be 'in recession' when there is no growth for two quarters in a row. We will not know whether we are currently in a recession until the first quarter growth figures are released later this year.

This think tank predicts the UK economy will shrink by 0.4% in 2012 - in October it predicted a 2012 growth of 0.7%. It warns the negative growth could be as high as 1.1% if eurozone debt problems affect the UK.

Others are also predicting a recession: the Ernst and Young ITEM Club says we are probably in recession now, and the Chartered Institute of Personnel and Development says that current unemployment (2.6m) will not fall below 2.5m until at least 2016.

A spokesperson for debt management company Gregory Pennington commented: "One increased risk people face during a recession is unemployment. We recommend families do everything they can to protect themselves financially for any eventuality, including budgeting carefully and trying to pay down any outstanding debts."