GDP Falls Steeply By 1.5%
With today’s figures indicating that the Gross Domestic Product fell by 1.5% over the last three months coupled with the previous quarter’s drop of 0.6% meant that the UK is finally officially in recession after two quarters of negative growth.
Here is the breakdown
- Construction output – down by 1.1 per cent
- Total production output – down by 3.9 per cent
- Manufacturing output – down 4.6 per cent compared with a 1.6 per cent decrease in the previous quarter.
- Mining and quarrying – down1.6 per cent
- Electricity, gas and water output – down 0.2 per cent
- Services output – down 1.0 per cent
- Distribution, hotels and restaurants : down 2.4 per cent,
- Transport, storage and communication : down 2.0 per cent
- Business services and finance : down 0.5 per cent
- Government and other services output : down 0.5 per cent,
- Agriculture, forestry and fishing output : up 0.1 per cent
It is difficult to see anything trending back up in the near term except perhaps government output as public spending is increased. Inevitably the private sector is going to suffer most contraction in trying to survive the credit crunch.
Economists do not expect recovery to start until 2010
Most economists expect the recession to last a further year at least, as it will take some time for the government’s measures to take effect.
Graeme Leach, chief economist at the Institute of Directors
We are well into the financial crisis but the economic crisis is only just beginning.
John Cridland, CBI Deputy Director-General
Looking ahead, we hope the impact of interest rate cuts, falling inflation, the fiscal stimulus and the Government’s recent measures to kick-start lending will have a stabilising effect later this year.
David Kern, chief economist at the British Chambers of Commerce
While the short-term outlook is dire, it is important not to drift into excessive despondency. The Government and MPC still have important weapons at their disposal, which they will undoubtedly deploy. The huge stimulus package that the new Obama administration plans to introduce could have beneficial global consequences.
So there is a view that the government is doing the right things to mitigate the length and depth of the recession.
Gordon Brown Needs To Apologise
The best that Gordon Brown can hope for, is to persuade us in 2010, that his good financial management meant we only had a recession whereas under a Conservative Government it would have been a depression. It is a hard sell and unlikely to work. Unless of course, he fesses up to having made some mistakes with public spending and apologises for that ridiculous ‘We will not return to the old boom and bust’ statement on 21st March 2007.
The other thing he could do is reach out to the Conservatives (Cameron and Clarke) and the Liberal Democrats (Clegg and Cable) to get cross party support for decisions that will impact the country for next three or four parliaments. Obama is doing likewise with the Republicans in the USA. Brown should follow his lead.