Is the recession over?
Figures due to be released later today are expected to show that the UK is finally pulling out of recession - albeit slowly.
After a false start last quarter (when predictions of an end to the recession were dashed by a 0.2% fall in economic output) the data out today (Tuesday 26 January) is forecast to show growth of 0.4% between the end of September and end of December 2009.
The rise would be the first for 18 months.
Howard Archer, chief European and UK Economist at IHS Global Insight, says all the evidence points to economic growth in the fourth quarter of 2009.
He explains: "Output in the services sector expanded for a second month running in October, while business activity index of the purchasing managers' survey for the services sector averaged 56.9 for the fourth quarter.
"While this survey appears to have been overstating the strength of the services sector in recent months, it is nevertheless the highest quarterly average since the third quarter of 2007 and substantially above the 50.0 level that is supposed to indicate unchanged activity."
In addition, Archer points out industrial production expanded by 0.4% month-on-month in November: "Even flat output in December would result in growth of 0.2% quarter-on-quarter in the fourth quarter."
But Douglas Roberts, senior international economist at Standard Life, says the return to economic growth will be slow.
"When you look at the peak of 6.1% we are still a long way off," he adds. "The economy is still very fragile. Overall, the economy contracted 5% in 2009."
Other data that could back up analysts' predictions include a 58.5% year-on-year increase in motor manufacturing, according to the Society of Motor Manufacturers and Traders, as well as a 0.2% quarter-on-quarter increase in industrial production.
Reports from the Confederation of British Industry would also suggest that exports rose, lifted by the weak pound and demand in overseas markets. However, this might be offset by increased imports, partly resulting from foreign cars bought under the scrappage scheme.
Not all analysts are agreed on a rise, though.
Duncan Higgins, senior analyst at Caxton FX, argues that last week's disappointing retail sales should serve as a reminder that nothing is a given when it comes to confidence in the UK's recovery.
"Forecasts suggest that the UK economy grew by 0.4% in the three months through December, but there could now be considerable downside risk to that estimate," Higgins says. "Should growth figures disappoint, the risk of a further extension to quantitative easing will certainly increase."
Lower interest rates encourage people to spend, not save. But when interest rates can go no lower and there is a sharp drop in consumer and business spending, a central bank’s only option to stimulate demand is to pump money into the economy directly. This is quantitative easing. The Bank of England purchases assets (usually government bonds, or gilts) from private sector businesses such as insurance companies, banks and pension funds financed by new money the Bank creates electronically (it doesn’t physically print the banknotes). The sellers use the money to switch into other assets, such as shares or corporate bonds or else use it to lend to consumers and businesses, which pushes up demand and stimulates the economy.
Confederation of British Industry
The CBI promotes the interests of its members, some 200,000 British businesses, a figure that includes 80% of FTSE 100 companies and around 50% of FTSE 350 companies. Formed in 1965, it’s the lobbying organisation for UK business on national and international issues and seeks to influence the UK government to help businesses compete effectively.