Powered By Yswq!


Britain stuck in recession

The Office for National Statistics said that British gross domestic product (GDP) contracted by 0.


2 percent during the July-September period compared with the previous three-month period.

Although the data was better than a previous ONS estimate of minus 0.3 percent, analysts’ consensus forecast had been for a revision to minus 0.1 percent.

Britain officially ends 2009 as the only top economy in recession after the eurozone, France, Germany, Japan and the United States have all emerged from a deep downturn that was sparked by the global financial crisis.

“Gross domestic product contracted by 0.2 percent in the third quarter of 2009,” the ONS said in a statement.

“This has been revised from a fall of 0.3 percent in the previous estimate of GDP, due to upward revisions to construction partly offset by downward revisions to production and services.

“GDP remains 5.1 percent lower than the third quarter of 2008,” added the statistics office.

British Prime Minister Gordon Brown’s government, heading for defeat in next year’s general election according to polls, believes that the country has returned to growth during the current fourth quarter.

But markets must wait for the release of official data in late January for confirmation.

“A reasonably strong return to growth in the fourth quarter of 2009 seems all but certain, as retailers benefit from what is looking like a strong Christmas,” said Ben Read, an economist at the Centre for Economics and Business Research, an independent consultancy.

Britain’s economy, which is struggling with high unemployment and massive public debt caused by the financial crisis, has contracted for six quarters in a row — its longest recession since records began in 1955.

British finance minister Alistair Darling recently admitted that Britain’s recession would be deeper than thought — with the economy predicted to shrink 4.75 percent this year compared with a prior official estimate of 3.5 percent.

The economy is expected to grow by 1.0-1.5 percent next year, Darling added, matching his previous forecast.

“Whilst we fully support the view that growth will soon reappear in the UK economy albeit at a very low level we continue to caution on expectations that growth … will continue throughout 2010,” BGC Partners senior strategist Howard Wheeldon said following Tuesday’s data.

“Whilst the rate of job losses in the UK has clearly slowed we have as yet been unable to find sufficient evidence of new investment intention within the corporate sectors that might lead to a period of new job creation and thus a period of renewed and sustainable growth,” he added.

There was meanwhile better news for another European nation on Tuesday, as Denmark announced it had emerged from recession in the third quarter thanks to its economy growing by 0.6 percent compared with the preceding three months.

The technical definition of a recession is two or more quarters running of contraction, on a quarter-by quarter comparison.

Comments are disabled.