Is the recession finally over?
To many people it may feel as though the UK has been stuck in recession forever, and the recent recession has resulted in many businesses and consumers suffering hugely as a result of job losses, plummeting sales and profits, and financial and economic chaos.
Many of those who survived the recession in the early 1990s will know that this most recent recession has proven even more challenging than the last one, and official reports have confirmed that it was the longest and deepest recession on record.
Over recent weeks there have been some signs of recovery in the UK, with the financial markets easing up, the property markets showing improvement, and unemployment levels far lower than had been expected. The final piece of welcome news came towards the end of January, when official figures confirmed that the UK was finally out of recession. There had been concerns that the UK was lagging behind other major economies in exiting recession, given that France, Germany, Japan, and the United States all came out of recession last year.
It was thought that the UK had come out of recession in the third quarter of last year, but shock figures revealed that the economy had contracted again and that the nation was still in the grip of recession. However, figures released from the final quarter of last year have revealed that the economy did actually grow slightly, bringing the UK out of recession to join the other major economies.
However, whilst consumers, businesses, and industry groups may be rejoicing because the recession is officially over at last there are some experts that do not feel that there is anything to celebrate just yet. This is because the level of economic growth recorded in the final quarter of last year was minimal, and meant that the UK had come out of recession only by the skin of its teeth. For some experts this raises the concern that even a slight shift in trend could send the nation spiralling back into recession.
The growth level for the final quarter of last year in the UK was just 0.1 percent, despite predictions of greater growth from industry experts. Many now fear that this could turn into a double dip recession in the event that this growth cannot be sustained. Officials believe that it may be far too early to celebrate the end of the recession, and that the government, businesses, industry groups, and consumers need to err on the side of caution.
One economist stated: “We can say that Britain has just crossed the line in coming out of recession. It was below analysts’ expectations. The figure could be moved down, or indeed upwards.”
Tags: recessions, economics, Economy of the United Kingdom, Economic history, MacroeconomicsAn analyst from Capital Economics added: “The Q4 GDP figures are a major blow to hopes that the UK economy had emerged decisively from recession in Q4. 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.”
