The United Kingdom has finally managed to get out of the largest recession since the 1930s – unfortunately growth is only at about 0.1% for the final quarter of 2009.
The forecast was slightly more optimistic at the city level where figures showed that there was an expansion of 0.4% over the same period. This figures mark an end to about six months of contraction, which saw the economy shrink by just over 5%.
The country is getting ready for an election in the coming year and the news of the end of the recession will be welcomed by the Labour government. Chancellor Alistair Darling’s spokesman said that this growth was exactly what the Labour party had predicted and he said that UK citizens could remain confident in the current government.
The shadow chancellor George Osborne was not as happy with these numbers and said they were less than impressive. He said the Labour party had been ill equipped for the recession as well as the recovery period.
The UK financial markets only saw loses after hearing this news. Sterling dropped against other currencies such as the dollar and the euro. Gilt futures also went up with this news.
Vince Cable, the Liberal Democrat spokesman regarding Treasury said that progress is rather slow and that the economy will only stagger back into a growth period into 2010. He was not impressed with the Labour government’s recent record.
There are only a small number of economists that felt the economy would recover quickly, as it is currently being weighed down by a somewhat fragile banking sector. Economists around the world also kept mentioning the high government and consumer debt levels that will slow everything further.
The British Chamber of Commerce director David Frost felt that this was obviously a good sign – that things were moving in the right direction – but that the economy was still “far from being out of the woods.”
A number of analysts throughout the UK believe that there is only “some growth” because of the extensive support measures made by the Bank of England. They also pointed to huge budget deficits that could also be the cause of these gains.
The consensus is that the economy is still fragile and that these support measures will need to stay in place for continued growth in the UK. It’s expected the country will see a growth of 1% per year over the next few years, which is much lower than the usual 2.5%.
The Office for National Statistics revealed a report this week that shows very low gains in October-December of 2009 but it still did signify the end of the recession.
ING official, James Knightley said that the United Kingdom had just barely exited the recession and said that retail sales numbers over the final quarter of 2009 were sluggish compared to years past. He said that consumer confidence was also very low and that debt problems were still rampant across the country.
The British Bankers’ Association reported that consumer debt repayment was moving very slowly and that personal loan and overdrafts were on the rise. These are all signs that the recession is still taking its toll on the United Kingdom and that it may for some time.
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Tags: Consumer Spending, Debt, economy, financial, money, Recession