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Britain on course to exit deep recession
2009-09-29
LONDON (AFP) - The deep recession in Britain is easing, official data showed on Tuesday, boosting hopes that the nation will soon join other major economies in returning to growth before the end of 2009. British output contracted 0.6 percent in the second quarter compared with activity in the first three months of 2009, better than the previous estimate of minus 0.7 percent, the Office for National Statistics (ONS) said. Gross domestic product shrank 5.5 percent between April and June compared with GDP in the second quarter of 2008. The 12-month figure, unchanged from the previous estimate made in August, marked the biggest drop since records began in 1955. "Today's data offers further indications that we are likely to see growth in the third quarter" and an end to Britain's deep recession, said Charles Davis, an economist at independent consultants, the centre for economics and business research (cebr). IHS Global Insight analyst Howard Archer commented: "Matters have moved on appreciably since the second quarter with the key question being has the economy returned to growth in the third quarter? "We suspect that it has, and are looking for expansion of around 0.3 percent quarter-on-quarter." The latest GDP data is a boost for British Prime Minister Gordon Brown, who was to address his Labour Party on Tuesday in a key speech that his opponents said could make or break him just months before a general election. Britain, like the United States, has yet to join other major economies France, Germany and Japan out of recession following the worst global downturn since the 1930s. "Gross domestic product contracted by 0.6 percent in the second quarter of 2009," the ONS said in a statement. "This has been revised from a fall of 0.7 percent in the previous estimate of GDP, due to upward revisions to construction output. GDP is 5.5 percent lower than the second quarter of 2008," it added. The annual figure was unchanged partly owing to a downward revision in first quarter GDP, analysts said. Last week, employers' body the CBI said Britain would emerge from its deep recession in the second half of this year, but warned that 2010 would be tough. The Confederation of British Industry had forecast that GDP would grow by 0.3 percent in the third quarter from the previous three months, and expand 0.4 percent in the fourth quarter. It added that the pace of recovery in 2010 was expected to be "slow", amid a backdrop of rising British unemployment. Recent official data showed that Britain's labour market was in its worst state for 14 years, with companies slashing jobs to save cash, despite tentative signs of economic recovery. The number of unemployed climbed by 210,000 to 2.47 million people in the three months to July -- the highest level since May 1995. The Bank of England has sought to combat the recession with record-low interest rates and a radical policy of quantitative easing -- pumping new cash into the economy to help kick-start lending to businesses and individuals. - The Office for National Statistics
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