2011 double-dip “unlikely” says BCC chief economist

There is no real risk of a new recession in 2011, according to David Kern, chief economist at the British Chambers of Commerce, who is also Financial Director's regular macro economics writer.

In his analysis and outlook for the global economy in the February 2011 edition of the magazine, Kern writes that while the optimism seen at the close of 2010 – when share prices hit their highest levels seen before the 2008 Lehmans collapse – may be overstated, growth forecasts in the key US markets have been revised upwards and the euro crisis may be settling.

"The good news is that a new recession is unlikely in 2011. Growth forecasts have been raised significantly for the US and fears that new crises may unleash a fatal attack against the eurozone have also diminished," writes the economist.

But Kern warns that countries have yet to tackle their underlying structural problems and that these may yet throw a spanner in sustainable global recovery.

"The surge in optimism is almost certainly exaggerated," he writes. "There is a dangerous tendency to magnify the important of favourable short-term factors while deep-seated dangers are being ignored. Recovery in 2011 will continue to be patchy."

Read David Kern's full piece in ‘The Macro View', in the February 2011 edition of Financial Director.