Thursday, January 26th 2012 - 05:28 UTC

Fears UK economy might have entered a mild recession at the end of 2011

Britain's economy may have entered a mild recession in the last three months of 2011, hampering the government's core policy aim of spurring growth and raising the chances that the Bank of England will inject more cash soon.

BoE Governor Mervyn King forecasts “arduous, long an uneven” recovery

Britain's recovery from the 2008/2009 recession - the deepest since the depression-hit 1930s - has already been sluggish, and unemployment has crept up to a 17-year high as the government cuts spending deeply to erase a huge budget deficit.

The economy shrank by 0.2% at the end of 2011, the Office for National Statistics said on Wednesday, a bit more than economists expected as a stagnating services sector failed to offset a slump in manufacturing and construction.

For 2011 as a whole, GDP expanded by 0.9%, less than half the pace recorded in 2010. The fourth-quarter contraction in output follows a 0.25% decline in German GDP, and if UK output falls in the first three months of 2012, Britain will enter its second recession in three years.

The minutes from the Bank of England's January policy meeting showed that the central bank inched closer to pumping more money into the faltering economy as risks from the global economy still loomed large, despite some improvements.

The central bank voted unanimously to keep the total volume of quantitative easing asset purchases steady at 275 billion pounds and interest rates at their record low of 0.5%.

”For some members, the risks of undershooting the (inflation) target meant that a further expansion of asset purchases was likely to be required,“ the minutes said in a slightly more assertive tone than last month.

But the minutes also noted that the European Central Bank's actions to provide unlimited long-term liquidity had helped to moderate the most serious risks.

BoE Governor Mervyn King said that Britain faced an ”arduous, long and uneven” recovery, and that the central bank had scope for another cash boost, if needed, as inflation is falling.

The drop in GDP also increases the chance that the Bank of England will approve a further 50 billion pounds of quantitative easing in February, once the current 75 billion pounds of purchases started in October are complete.
 

Published in: Economy, Latin America.
Tags: Bank of England, Mervyn King, recession, United Kingdom.

9 comments Feed

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1 Fido Dido (#) Jan 26th, 2012 - 07:43 am Report abuse
Aaaand there will be more printing...print, print, print, everything is fine, ohh we are so RICH..yeahhh and this one I like..YEAHH, FALKLANDS IS OURS..and LET'S GET IRAN..YAHHH.

Introducing Mervyn King printing money easing kit :D

picasaweb.google.com/lh/photo/7Dw8AmtOC9osIEc5AQBJQdMTjNZETYmyPJy0liipFm0?feat=embedwebsite
2 Teaboy2 (#) Jan 26th, 2012 - 10:46 am Report abuse
NO they will not be printing, you will find that its virtual money and so what if where doing QE, it worked in the 3rd quarter last year by giving us growth. Plus the figures out yesterday are not final either. Oh and look, overall our ecomony grew 0.9% last year.

Oh and you may not like this, but its a well known fact that a war would boost the economies of the nations that are involved as well as those that supply them. Thats what happened in the 1940's in the USA and thats what made the USA the economic powerhouse it was for the remainder of the last century.
3 Forgetit87 (#) Jan 26th, 2012 - 11:09 am Report abuse
Definitely the good house in a bad neighbourhood, economically speaking. Oh, wait.
4 Marcos Alejandro (#) Jan 26th, 2012 - 03:33 pm Report abuse
3 Hmmm I read that before :-)))))))

1 ElaineB “Definitely the good house in a bad neighbourhood, economically speaking”

en.mercopress.com/2012/01/25/chile-the-most-globalized-economy-in-latin-america-says-ernst-young#comments
5 Fido Dido (#) Jan 26th, 2012 - 06:01 pm Report abuse
ElaineB is my favorite “expert” of good homes in a bad neighborhood, economically speaking.

Idiot #2, Keynes, Greenspan, Bernanke, Mervyn King and the rest of the gang are proud at trolls like you. War cost money, it does not produce wealth, it destroys wealth and matter of fact, the US got out of the depression after world war 2, thanks to innovation and a strong manufacturing sector, what the US doesn't have anymore. Secondly you F''ing moron, qe=printing digital money that isn't worth the paper that bought the debt of the banks and it's buying it's own bonds on the open market. It never worked so it won't work and it doesn't benefit the people. Only the banks, that are broke.
6 O gara (#) Jan 26th, 2012 - 06:42 pm Report abuse
1/5 they are debating 50 or 75 billion.The debt is over 1.6 trillion dollars and growing at over 200 a year mind boggling stuff,Its no wonder Cameron was desperate at the EU summit all that works at all in the country is the City and if the EU regulate it the whole country is down the tubes.Scotland is busy preparing a referendum to get the hell out and even Cornwall has seen anew seperatist movement
7 ed (#) Jan 26th, 2012 - 09:28 pm Report abuse
I don't think as similair as this article's title,
It should has been that -- UK economy might have entered a mind
recession at the end of 2011-- not mild.
8 Fido Dido (#) Jan 27th, 2012 - 05:12 am Report abuse
6, Chicken hawk and Loud mouth Cameron was desperate at the EU summit defending it's capital of fraud (London) against the French and Germans who wants the Tobin Tax ( a tax on every worthless derivatives they, the mega banks, trade between each other and is being bought up by it's so called central banks, quantitative easing) to destroy competition, London. At the otherside the treath is working, since the banks in London are closing positions and moving to Asia, Singapore and Hong Kong. Not to mainland China, because there they hang fraudsters, but since banking in China is like fishing in murkey waters, i'm sure they don't mind them at all so long it benifits the elite. Anyway, the Ugly brits are losing it and I wonder if the those scots have the guts to leave the UK. I doubt it.
9 ChrisR (#) Jan 28th, 2012 - 04:43 pm Report abuse
No, you have all misunderstood what the fabled BoE Governor Mervyn King is actually saying.

He is saying 'and my dick is only this big'!

This pratt and the c*nt Brown have more than anybody to put Britain into the mess is it is in today.

Mervyn King, like 'Camoron', has never held a job in the real world: he is an academic and should go back to doing it.

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