Friday, August 22, 2008

Confirmation - we are in recession.

This has just been confirmed by the ONS:

In the second quarter of 2008, there was zero growth in UK gross domestic product (GDP) in volume terms compared with the previous quarter (revised down from the preliminary estimate of 0.2 per cent).

The level of GDP is 1.4 per cent higher than the same quarter of 2007.

Between quarter one and quarter two of 2008: The volume of output in the production industries fell by 0.8 per cent, within which manufacturing also fell by 0.8 per cent.

Output of the service industries increased by 0.2 per cent. Construction output growth is estimated to have fallen by 1.1 per cent.

Household expenditure fell by 0.1 per cent.

The BBC report says "UK economic growth ground to a halt between April and June, according to the latest official data.

The services sector, the backbone of the UK economy, grew just 0.2%, while manufacturing output fell by 0.8%.

"The figures are very weak and suggest the UK economy is already in recession," said George Buckley, an economist at Deutsche Bank.

The 'economic downturn' has become a technical recession, and in my view there is a lot worse to come as unemployment, repossesion and business failure rates all dramatically lag the leading indicator GDP figure by six months to a year which means all through 2009 there will be further gloomy news even if the recession turns out to be short and shallow.

Mind you, the indicators are that far from being short this recession may be quite long - there is an awful lot of private debt out there that is going to have to be either paid off, written off as a bad debt or eroded by inflation before the economy can begin to grow again.

Oh the hubris of a Chancellor who claimed for ten years that he and he alone was the master who had banished recession from the British economy for good.


Anonymous said...

If he was running a company he would have been sacked. As it is we are going to have to wait two years to dump him - heaven alone knows what kind of a mess we will be in by then!

David Gerard said...

The solution to the economy: complete apathy.