Fears triple-dip recession looming - FT.com At the end of a week in which George Osborne was forced to confront a downgrade in the growth prospects in his Autumn Statement, fresh data have raised fears that Britain is heading for a triple-dip recession and that his assessment of the economy remains over-optimistic. Woeful official figures on British manufacturing, released on Friday, stoked concerns that the economy would contract in the final quarter of the year, following its recent return to growth. Manufacturing output, which makes up just more than 10 per cent of the economy, slumped 2.1 per cent in the 12 months to October, data from the Office for National Statistics showed. The data, which were far worse than expected, came after official figures on Thursday indicated that the trade deficit had widened in October, dashing hopes that the economy would be able to trade its way out of trouble. "Triple-dip watch starts here," said Alan Clarke, an economist at Scotiabank. Growth would have to elude the UK in the first quarter of 2013 for a triple dip to occur, as the economy must contract for at least two quarters in a row to be in recession. "Judging by the official data we have seen for the fourth quarter, notably retail sales, trade and industrial production, the UK will struggle to avoid a renewed downturn after the brief return to growth in the third quarter," said Chris Williamson, economist at Markit, the data analyst. Earlier this week, Markit's purchasing managers" indices of activity in the services and construction sectors undershot expectations for November. The PMI for the dominant services industry, which accounts for more than three-quarters of the economy, showed that sector was still expanding - but only just. The disappointing PMI data were followed on Wednesday by a slashing of official growth forecasts. The Office for Budget Responsibility delivered the bad news to Mr Osborne that the economy was likely to shrink in the final quarter and in 2012 as a whole. The OBR also joined the Bank of England in ruling out the possibility of a revival of the economic fortunes in the near term, downgrading its forecasts for growth for each of the next five years. The fiscal watchdog now expects the economy to expand by just 1.2 per cent next year, down from a spring estimate of 2 per cent. The downgrades bring the OBR into line with private-sector economists. Its pessimism was matched by the National Institute of Economic and Social Research, an economics think-tank, which on Friday said that output contracted in November, though the economy had expanded slightly over the course of the past three months. Niesr said: "Growth is forecast to return in 2013, but not at speeds that will begin to close the UK's negative output gap and bring down the rate of unemployment in that year." Like the OBR, the think-tank expected economic output to remain below its pre-crisis peak until 2014. Other economists are gloomier still. Michael Saunders, an economist at Citi, said: "The OBR is too optimistic, again - a familiar story for them and the BoE." Erik Britton, an economist at Fathom Consulting, agreed that since its creation in 2010, the OBR's forecasts have repeatedly proven over-positive. The forecasting track record of the OBR ... is truly awful. If they're really independent, then they have misled the Treasury on the growth outlook to such a degree that it might cost us our AAA credit rating," Mr Britton said. If they're not really independent, then why were they created in the first place?