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UK economy emerges from recession

2010-01-26 10:09:17

The UK economy has come out of recession, after figures showed it had grown by

a weaker-than-expected 0.1% in the last three months of 2009.

The economy had previously contracted for six consecutive quarters - the

longest period since quarterly figures were first recorded in 1955.

There have been recent recovery signs - last week UK unemployment fell for the

first time in 18 months.

The UK's had been the last major economy still in recession.

Europe's two biggest economies - Germany and France - came out of recession

last summer. Japan and the US also emerged from recession last year.

'Below expectations'

"We can say that Britain has just crossed the line in coming out of recession,"

said BBC chief economics correspondent Hugh Pym.

"It [the growth figure] was below analysts' expectations. The figure could be

moved down, or indeed upwards."

Our correspondent said the move out of recession had been greatly boosted by

the government car scrappage scheme.

Joe Grice, from the Office for National Statistics (ONS), said the UK's

production and service sectors each grew by 0.1% during the quarter.

The ONS figures also showed that GDP fell by a record 4.8% in 2009.

"The Q4 GDP figures are a major blow to hopes that the UK economy had emerged

decisively from recession in Q4," said analyst Jonathan Loynes at Capital

Economics.

"No doubt some commentators will claim that the figures are under-estimating

the true strength of the recovery and will be revised up in time.

"That is certainly possible. But it won't change the big picture of an economy

still operating way below both its pre-recession and trend levels of output."

'Frail' recovery

The UK recession began in the April-to-June quarter of 2008, and was the

longest UK recession on record.

During 18 months of recession, public borrowing increased to an estimated

178bn, while output slumped by 6%.

After the GDP figures were published, John Wright, chairman of the Federation

of Small Businesses, said that the recovery remained "frail".

"In order to strengthen the recovery it is important that we boost consumer

confidence and demand and that interest rates are held steady as continued

investment in the economy will be the key to ensuring a sustainable recovery,"

he said.

First estimates of how the economy has performed are made with about 40% of the

data available, and Investec economist David Page has warned there is "plenty

of room for surprises" in the figures.