As predicted the UK economy came out of recession in the last quarter of 2009.
However, the official figures showing growth of just 0.1% hardly make good reading, it should be remembered we are the last major economy to come out of recession and whilst other countries bounced out it the UK is limping slowly. Compounding the disappointing news the figures also showed that output fell by a record 4.8% in 2009.
The low growth figure has left many discussing the possibility of a ‘double dip’ recession and will, for the time being, probably encourage the Bank of England to keep interest rates low, at least until the signs of growth are stronger.
Reaction was mixed, with politicians having one eye on May.
“We are on a path to recovery…..I’m confident but I’ll always remain cautious”, “What we and other countries have done has stopped the recession from turning into a depression.” – Alistair Darling
“Let’s be clear – this is about as weak growth as you can get.” – George Osborne
“Far from the quick recovery the chancellor has been praying for, the economy is only just staggering back into growth.” – Vince Cable
“Even with some revision ….we are still talking about an extremely lacklustre recovery.” – Stephanie Flanders BBC economics editor
Naturally there was further reaction from the wider UK Economy with some of the UK’s leading fund managers particularly downbeat about the figures:
“We are growing, but it’s anaemic. We are not going to just bounce back from the fall we’ve seen, and anaemic recovery is the right place to be (in terms of expectations).” – Paul Marriage, Cazenove UK Smaller Companies Fund
“Growth of 0.1% after £200 billion of quantitative easing and a prolonged period of very low interest rates is a pretty limp showing by the UK economy” – Patrick Harrington, Jupiter Undervalued Assets
“Today’s news suggests it is likely to be even more of an uphill struggle than had previously been supposed. It means for the foreseeable future that the UK economy will probably grow at well below trend (about 2.5-3%GDP per annum). The consensus forecast for 2010 is about 2% and this now looks too high in the light of the disappointing data for both the third and fourth quarters of last year.” – Ted Scott, director of UK Equity Strategy at F&C Investments
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