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UK suffering the longest recession since records began

Saturday, October 24th 2009 - 16:56 UTC
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The economy has shrunk for six quarters in a row The economy has shrunk for six quarters in a row

The UK is now in the grip of the longest recession since records began, according to gloomy official figures. Hopes for an end to the recession were scuppered as the economy shrank by a shock 0.4% between July and September - a record sixth quarter in a row of decline.

Output has now slumped 5.9% since the onset of recession - almost as bad as the 6% slump seen in the early 1980s - the Office for National Statistics said.

The lingering decline comes despite interest rates at a record low of 0.5% since March, additional Government spending and an unprecedented £175 billion boost to the money supply through quantitative easing.

And it shows the UK lagging behind other major economies such as France and Germany, which both emerged from recession in the second quarter of the year.

Chancellor Alistair Darling said he was still confident of a return to growth “at the turn of the year” but the Government's stewardship of the economy came under heavy fire from political opponents.

“This news has destroyed Labour's claim that Britain was better placed than other countries to weather the storms,” shadow chancellor George Osborne said.

Liberal Democrat treasury spokesman Vince Cable said the economy still faced “massive structural problems”. He added: “It is critical ministers spell out a credible path as to how they will deal with the deficit.”

Experts had been ready to toast a technical end to the recession during the period, with forecasts of a modest 0.2% advance ending five quarters of decline. But the pound sagged against the dollar and euro on the hugely disappointing figure as markets bet on more support for the economy from the Bank of England with an extension of the QE programme to as much as £250 billion.

Economists warned of a potential deflation risk and said it could take at least six years to make up the output gap left by the recession. “Even accounting for a dent to potential output from the recession, the output gap is probably already over 3% of GDP and is unlikely to be closed until 2015 or so,” Vicky Redwood of Capital Economics said.

Categories: Economy, Politics, International.

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  • VicenteA

    Due to recession not only have the value of stock portfolios within many 401(k) retirement accounts plummeted, but now employers are starting to cancel matching contribution policies. However, most industry analysts are purporting that the practice is only a temporary measure, just to weather the recession. The 401(k) plan replaced the pension as the standard of retirement benefits that employers offered, and are most people's standard retirement plan, if they have one at all. That said, when employers stop contributing to employee 401(k) retirement accounts, it makes people wonder about <a rev=“vote for” title=”Debt Relief Hard To Handle | Employers Change 401(k) Rules“ href=” ”>debt relief</a> for their future.

    Nov 03rd, 2009 - 04:49 pm 0
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