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UK economy still in recession

2:52pm GMT, Friday, 23 October 2009

Official figures from the ONS show that the UK economy has contracted for yet another quarter. Official figures from the ONS show that the UK economy has contracted for yet another quarter.

For the sixth consecutive quarter, the recession in the UK continues as the economy surprisingly contracted by 0.4% between July and September 2009.

It is the first time since records began in 1955 that UK gross domestic product (GDP) has decreased for six quarters in a row. GDP measures the total amount of goods and services produced by a country.

The official figures from the Office for National Statistics (ONS) are only the first estimate and could still be revised up or down.

Most analysts had predicted the UK would emerge from recession this quarter. Germany, France and Japan have already exited recession.

A quarterly growth of 0.2% had been expected, despite the recent poor retail sales figures and 2.5% decline in industrial output in August.

An unexpected 0.2% decline in the UK services output was a key factor behind the ongoing recession, with distribution, hotels and restaurants faring the worst.

The further economic contraction is likely to make the Bank of England consider extending its programme of quantative easing, despite the little effect it seems to be having on the economy thus far.

In response to the latest figures, Chancellor Alistair Darling said that he had never expected any growth to occur in 2009. He said that the economy will recover but it will take time.

Talking to the BBC, Shadow Chancellor George Osborne said that the figures were “deeply, deeply disappointing”. He added that the continued decline “destroys the myth that Britain was better prepared.”

Categories:
Business, Europe, Finance, Politics
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