There had been warnings that the last quarter could have experienced a contraction in the UK’s economic growth.  According to a report from the National Institute of Economic and Social Research (NIESR), there was a 0.3% contraction in the last quarter of 2012 which would mark only one quarter of growth out of the double dip recession that ended last year in the third quarter.  The data must be officially confirmed by the Bank of England later this month to officially mark a contraction.

The NIESR blames the strong growth report for the third quarter for the contraction of the last quarter.  It was during the third quarter that tickets and retail sales to tourists visiting for the Olympic and Paralympic Games occurred.  The only growth quarter at that time registered a growth of 0.9%.

The warning for the possible triple dip recession came on the heels of a report that the service sector had declined for the first time in two years.  Construction also contracted at 3.4% for December. 

Experts believe this will cause the Bank of England’s Monetary Policy Committee to add to their quantitative easing (QE) efforts.  The additional QE could possibly come as early as May after a period of “wait and see” by the policy makers.  The standard base interest rate is expected to therefore remain at the current 0.5% keeping borrowing cheap despite an expected increase in the inflation rate and it remaining above the Bank’s goal level of 2%. 

Current lending in the mortgage and remortgage markets are not expected to show any change to news of a triple dip recession warning.  The current Funding for Lending Scheme is helping to keep funding costs low for lenders which in turn is allowing them to offer affordable, low interest rates on mortgages and remortgages.