Our monthly estimates of GDP suggest that output grew by 0.1 per cent in the three months ending in May after declining by 0.1 per cent in the three months ending in April 2012. The UK economy has ceased to contract, but economic activity remains very weak. With the economy stagnant, the negative output gap is likely to widen further. We expect the UK economy to remain broadly ‘flat’ over the next 6 months. While significant downside risks persist, we expect economic recovery to begin to take hold in 2013.