Afternoon:
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Worst recession for half a century
Ben Bailey24 Jul 2009
Hopes of a swift end to recession were shaken today after figures showed a far worse than expected 0.8% decline in the economy between April and June.
The UK's fifth successive quarter of recession was much deeper than the 0.3% forecast, stunning experts and business leaders.
The economy has slumped 5.6% since the second quarter of 2008, according to the Office for National Statistics' (ONS) estimates - the biggest fall since its records began in 1955.
IHS Global Insight economist Howard Archer called the figures "a really nasty and disappointing shock", while the Institute of Directors warned of a "long, slow path" to recovery.
Senior policy adviser Corin Taylor said: "It looks like this recession still has some way to go, and we don't expect growth to resume before 2010."
Although today's figures may be revised by the ONS when it has more data on the economy, it puts pressure on Chancellor Alistair Darling's forecast of a return to growth by the end of this year.
The economy has now shrunk by 5.7% since the first quarter of 2008, the ONS said.
This is more than double the depth of the early 1990s recession and approaching the level of the slump seen in the early 1980s.
Although today's figures bettered the sharp 2.4% contraction seen in the first three months of 2009 - the worst quarterly slump since 1958 - experts were hoping for a much bigger improvement in the economy.
A 0.7% fall in output from business services and finance - the worst since the ONS began measuring the sector in 1983 was the biggest driver behind the 0.8% second quarter decline.
The services industry - accounting for almost three-quarters of overall economic output - showed a 0.6% fall.
Construction industry output fell 2.2% over the quarter and is now 14.7% below the same period last year, which is the biggest fall since records began in 1948.
Production industry output - such as construction, mining and manufacturing - fell 0.7% between April and June, the ONS added.
Experts predicted that interest rates would remain at 0.5% well into 2010, while the Bank of England would soon drop its "wait and see" stance and resume efforts to boost the money supply through quantitative easing.
Mr Archer added: "The sharp second-quarter drop suggests that hopes of recovery over the coming months are based on even rockier ground."
David Kern, chief economist at the British Chambers of Commerce, said: "There is no room for complacency and suggestions of suspending quantitative easing are misguided.
"It is important to persevere with an aggressive policy stimulus to ensure that the economic downturn does not worsen."
Economists warned of an "extremely sluggish and protracted" exit from recession - due to the weakness of the banking sector, as well as likely tax hikes and spending cuts on the way to cut soaring debts and put the public finances back on a firmer footing.
Vicky Redwood of Capital Economics said: "Bank lending looks set to remain weak for some time. Although the timing is not yet clear, a severe fiscal consolidation is on its way at some point.
"Consumers and companies still need to reduce their debt levels."
Reader views (42)
TELL US SOMETHING WE DON'T ALREADY KNOW.
A walk around your local high street/shopping centre will tell you more than a thousand words ever could.
BROMLEY HIGH STREET , this Saturday was HALF EMPTY , i could count the number of people in British Home Stores on on hand .There were also a large number of CLOSING DOWN SALES,shops lying empty with bailiffs notices in the window.HALF PRICE SALES EVERYWHERE trying to tempt shoppers in (still half empty shops).THINGS CAN ONLY GET BETTER was the Nu Labour soundbite once , don't hear it much now do you.
2.4 MILLION UNEMPLOYED AND RISING. My son 16 and daughters 17 and 21 have NO and i repeat NO hope of getting a job at the moment in this country due to the import of cheap foreign labour and the current economic climate (one local job centre was offering jobs to young females to work as escorts YES PROSTITUTION ,SHAME ON YOU LABOUR. It's time the people of Britain finally said ENOUGH IS ENOUGH .We need a new COMMON SENSE PARTY to sort out the dire mess we are in before there is total social,moral and economic collapse in this once great country of ours .
It makes me want to weep.
MR (IV'E HAD ENOUGH ) PASTRY
- Mr Pastry, london england, 27/07/2009 08:27
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Just recently have checked the Economist, and as we all know these guys don't mess around regarding the indexes and positions we have in the world, so from 2009-2013 we gonna slide from being 13th in the charts of the performing countries into 25th, 'fantastic' results, well done, our government doesn't just thinks and acts well but also outperforms previous generation(s) in getting everything wrong. By the way French will move from 19th into 17th position, and Finnish will become ranked number 1 in the world. So, shall we start emigrating to Finland or France, maybe, but what if we just stop producing garbage and concentrate on our entrepreneurial skills and innovation(forget about going green rubbish)and come up with new trends i.e. perpetual motion, or vaccine against HIV/AIDS (not swine flu), etc., and sell it to the rest of the world. Guarantee, within a year we will overtake the Finnish.
- Gio London, London, 26/07/2009 23:25
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"Jim Of Oz, Poland's is economy still growing and unlike Australia it hasn't had a a negative quarter and unlike Australia, its not likely to have another one.- Pete, London."
It matters little whether the UK's national debt now almost equals the UK's GDP or Australia's and Poland's economies are not in recession as yet, what matters is how the UK manages the problem. People who know the UK know that they always perform better in adversity so am sure they will get over this current economic malaise, when the Labour louts get chucked out, which they surely will, it'll all come good. As the saying goes England always loses every battle except the last one.
- Len, Perth Australia, 26/07/2009 02:44
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Unemployment is still rising, 2.4 million as yet, and predicted to hit 3.5m next year. Yet our 'new' Home Secretary, Alan Johnson, says openly that immigrants can keep on coming. Is he mad? Or is he an undercover mole from the BNP? Why allow millions more into the country when we have millions of our own on the dole? Deat wish New Labour are a disgrace to the country....and as to the fools who continue to vote for them.....
- Jaybee, altrincham, 25/07/2009 08:01
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My suggestions for health care reform in the USA:
On CNN at http://www.ireport.com/docs/DOC-303496
- Rick Huffman, Saint Joseph, Michigan, USA., 25/07/2009 02:22
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Thanks to a poor chancellor and now the worst prime minister and useless chancellor but Mandy is going to save us!
- Edwin, beaconsfield buckinghamshire, 24/07/2009 17:32
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Pricey, you are as daft as a brush, with all your looney leftie rubbish, give it a rest lad.
- Dee Jay, Fleet UK, 24/07/2009 17:13
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So,Nj of London "Seems like most people prefer to believe the gloom and doom scenario rather than the upbeat version. Personally I think both articles are a load of rubbish, written by people who know very little about economics and commented on by people who know even less".
If you are such an expert, why don't you enlighten the rest of us with the correct version of events?.
- Mark Burton, St Ives. Cambs, 24/07/2009 17:07
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Ey up Keith, nice to know something scares you, or does your last comment 'I am afraid' refer to something else.
Before you criticise others for bad spelling or grammar, have a look at your own posts, theres a good lad. We are all not perfect are we !!!!
- Al, Kingstown UK, 24/07/2009 16:44
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"th worsed it yet to come,when TRAITOR blair becomes EU president.he,ll fix his neloved country from there.its the 3rd world you arein NOW you cannot overcome the DEPT,thrououtthe UK going up daily,we need CHURCHILL"
This inane and illegible comment proves everything people fear about Americans, I am afraid
- Keith Price, Luton, England, 24/07/2009 16:02
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Very strange how the BBC News just this morning showed plenty od evidence to prove that the recesssion in the UK is coming to an end. I believe them. Well done Gordon brown for sticking to your promoses unnlike one or two other party leaders recent;y
- Keith Price, Luton, England, 24/07/2009 15:57
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I t`s quite possible that Keith was being ironical - the BBC would peddle the message that "all is getting better" (remember the NuLabour song)?
Brown and the BBC are hoping they can keep this upbeat message going long enough to fool sufficient numbers of people, including their silent majority of benefits addicted clientelle, to give them enough votes for at best a reduced majority, at worst a hung parliament.
This is why they are hanging on.
The BBC doesn`t want Tory changes to it`s cosy structure - this is why they are supporting the message.
Remember the other slogan of `97, from the tories - everyone was up in arms about it - "New Labour,New Danger"
- Darius, London UK, 24/07/2009 15:48
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To anyone with even a basic knowledge of economics it was obvious boom was going to turn to bust a good five years ago. The writing was on the wall as house prices went roaring upwards, unemployment hit record lows and inflation started going up fast. Yet rather than taking the right action to cool the economy down and get things back to an even keel, the government boasted constantly about its economic management and did nothing, believing the good times could last forever. We're now paying the price for this stupidity.
- Matt, London, UK, 24/07/2009 15:36
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th worsed it yet to come,when TRAITOR blair becomes EU president.he,ll fix his neloved country from there.its the 3rd world you are in NOW you cannot overcome the DEPT,throuout the UK going up daily,we need CHURCHILL
- Phil, usa, 24/07/2009 15:01
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If anyone knows the whereabouts of Keith Price in Luton could they please call us and we'll collect him. This is a matter of priority.
- Men Inwhitecoats, asylum forthecriminallyinsane, 24/07/2009 14:54
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"That is pure political spite, if you ask me"
Yet again Keith (Unison bought and paid for) Price arrogantly posts. Every post from Keith is politicall spiteful lacking any balance or judgement.
Keith you are always found out. Keep it up as with brown decimating this country's economy any pathetic attempts at propaganda for this disgrace might extract a wry smile at your pathetic ego. Brown and Price-two peas in a pod.
- Brian, biggleswade, 24/07/2009 14:50
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Evening Standard, 14th July 2009, "UK recovery hopes grow as pain eases"... funnily enough that story only attracted two (both derisory) comments whereas this one has attracted over 20 so far (and counting). Seems like most people prefer to believe the gloom and doom scenario rather than the upbeat version. Personally I think both articles are a load of rubbish, written by people who know very little about economics and commented on by people who know even less.
- Nj, London, 24/07/2009 14:18
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Thats correct Keith, I want the recession to get worst. Love spending my time on the dole waiting for the house to be repossessed. So what is your comment based on. Arrogant assumptions as usual.
- Chris, Rochester, 24/07/2009 13:59
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Jim Of Oz, Poland's is economy still growing and unlike Australia it hasn't had a a negative quarter and unlike Australia, its not likely to have another one.
- Pete, London, 24/07/2009 13:56
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I, like other people, should like to see an immediate general election in order to have a fresh start to bring a sense of order to the unfortunate state of the national economy. It is now no use for Gordon Brown clinging to office as and when Parliament reconvenes there will be very little Parliamentary time to implement a full programme. So why keep the national waiting any further. It would be better, surely, for the nation to have a chance of an election now instead of enduring this apparent misery with the present party in office?
- Arthur Lincoln, Roeselare, Belgium, 24/07/2009 13:45
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the only credible measure of the effectiveness of the Govt is how the UK is managing compared with other countries. Clearly this is a Global issue. So in terms of a success scorecard the UK is certianly not at the top of western developed economies - eg Canada but certainly in a much better state than many including Germany, Spain and particularly the US, where in fact California is now close to bankrupt. If Brown failed to predict the global recession and take positive action to prevent it, which in hindsight he clearly is guilty of- ie suppress house price demand - he was certainly not alone in the world.. whether they be left or right wing governemnts.
- Martin_Clerkenwell, london, 24/07/2009 13:33
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Theres no recession down here in Australia, we are the only western country to advoid one, not bad for a bunch of convicts.
- Jim Of Oz, Melbourne Australia, 24/07/2009 13:23
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Gordon Brown's fiscal stimulus is just 'a quick fix' which we are seeing now, very little has been done to change things on a permanent basis. Just look at the Banks - it's business as usual for them, they have learned nothing over the past 18 months.
I said it a year ago here and I'll say it again - THROWING MONEY AT A FAILED ECONOMY WILL ONLY MAKE MATTERS WORSE IN THE LONG RUN. Until measures are taken to control public spending and run a prudent economy things will continue to deteriorate both financially and socially in Britain. Recovery is going to take years, long after New Labour have gone, and there will be hardship that the under 40's can't even comprehend to go through.
So lets not have anymore 'green shoots' rubbish, we need to get our heads down and work our way through this recession - just like our forefathers have in past decades, governments need to stop trying to fudge the markets to save their own skins, frittering away our money. Just like banks - countries can go bust too.
- Mark Burton, St Ives. Cambs, 24/07/2009 12:51
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Darius is right. We have all got another 5 years of this, but we can all thank Labour at the next election.
The middle classes will be paying for Labour's economic disaster.
- Dave Davies, Basingstoke, Hants, 24/07/2009 12:43
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Poor Gordon Brown - he sat in the Commons for ten years under Tony's shadow, sulking and biting his nails because Blair wouldn't let him play Prime Minister. Then at last (when Tony could see the fertilizer heading for the rotating blades) he let Poor Gordon play. Then, horror upon horror, Poor Gordon realised that, as Chancellor, he had ballsed up the economy, and worse still: he is USELESS as Prime Minister and a World Leader!
EDITED by admin @ 15.05 on July 24 2009
Spirit/Tone
- Anil Chatterjee, Manchester, 24/07/2009 12:38
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Keith - Dont you ever get embarrassed by what you write? You should do. Content and spelling is always so very poor.
- Dave Davies, Basingstoke, Hants, 24/07/2009 12:34
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Keith Price, I thought all your sentences had to begin with "Well done Gordon Brown for getting the UK through ..." ?
- Marianne, SW France/London, 24/07/2009 12:11
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“Since records began”. A good by line for editors but what does it mean? So far there is no visible evidence that things are as bad as the “Great Depression” but apparently records hadn’t begun then (oh yes they had) so no comparison is made.
- Bj, London, 24/07/2009 12:00
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Praise be to Gordon.
- Keith, London, 24/07/2009 11:43
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Can someone tell the estate agents, as they seem to think we're in a boom period again.
- Andyamadeo, highgate, 24/07/2009 11:39
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"Bad luck Keith. Looks like the green shoots you have been calling for months have turned out to be weeds."
No - it is bad luck for you Cgris, as you say yoou live in a country that is suffering a recession. Your arrogant tone suggests you want the effects of the worldwide recession to get worse not get better. That is pure political spite, if you ask me
- Keith Price, Luton, England, 24/07/2009 11:25
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Do you really think we needed to be told that! Mugabe-Brown and his band of unelected morons need telling.
- Mike,, London, 24/07/2009 11:16
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Gordon will save us. He is, no doubt, writing a speach right now in which his inspirational words will thrust us into an historic era of gordonomics and blow away our economic misfortunes - or it'll get worse.
- Mannie Muckle, Clapham, 24/07/2009 11:11
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Dave, why are you upset that the MPs are off for 14 weeks. At least the country is safe for that time!
Perhaps we should give the MPs a 52 week holiday?
- Ray Charles, London, 24/07/2009 10:59
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This is NOT the 1970`s - people now are comparatively decadent, if the lead crystal is not shiny enough straight out of the dishwasher is the kind of TV ad aimed at the "middle classes" now, not "how to make candles for use in the next power cut"!
The middle class under 40`s simply have no concept of real daily hardship, as opposed to having to trim back the consumption of those foreign holidays, putting up with smaller plasma TV’s, less guzzly cars ,or, heaven forbid, reducing mobile phone or internet bills.
However, they may well be more anxious now, as, the more "things" you`ve got, the more you`ve got to lose.
Maybe we will all benefit in the long run by a hardship reality check.
Brace yourselves middle England - you may have to put up with dull dishwasher output for quite a few years to come.
- Darius Midwinter, London UK, 24/07/2009 10:53
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I would put up with another year of this if it means the end for Labour.
- Steve, London, 24/07/2009 10:46
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Bad luck Keith. Looks like the green shoots you have been calling for months have turned out to be weeds.
- Chris, Rochester, 24/07/2009 10:42
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Well done to our MPs,you have left 30% of the population living in the dark ages.No money to buy food,pay bills or get employment.ps,hope you have a great 14 weeks paid holiday.
- Dave, london, 24/07/2009 10:36
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The recession in the construction industry is the worst in 50 years, but "The economy has now shrunk by 5.7%...approaching the level of the slump seen in the early 1980s" so, in actual fact, the economic recession is not yet quite so bad as that which Mrs Thatcher managed as a 'corrective measure'.
- Prototypical Englishman, Wormwood Scrubs, 24/07/2009 10:21
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But the BBC News just this morning showed plenty od evidence to prove that the rexesssion in the UK is coming to an end
- Keith Price, Luton, England, 24/07/2009 10:17
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It's high summer and we can have a cold beer and sunbathe in a London park - but the winter will sort the men from the boys; no mistake!
- Ted, London, 24/07/2009 10:15
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Where is Keith from Luton thanking Gordon Moron for leading us out of economic recession?
- Joanna Carling, london, 24/07/2009 09:58
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