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UK in sixth consecutive quarter of recession

The UK has lost 6% of its entire economic output in the longest ever recession.

The economy has been shrinking for six consecutive quarters in the months to September, according to revised figures from the Office for National Statistics (ONS)

The figures show the economy shrank by 0.2% between July and September, in the middle of the 0.3% ONS prediction and the 0.1% hope of City experts.

The UK is still predicted to come out of recession in the final quarter of 2009 thanks to a flurry of Christmas spending, in keeping with Chancellor Alistair Darling’s prediction made in the pre-budget report.

Nevertheless, Jonathan Loynes, Capital Economics chief European economist, said: “With household debt still very high, credit constrained and a fiscal squeeze looming, the economy still as a lot to contend with.”

The Confederation of British Industry (CBI) has said that it predicts the recession to end with a 0.5% growth in the final quarter as consumers take advantage of the reduced VAT rates, but recovery will have “headwinds” slowing it down.

“The UK economy faces a number of structural hurdles over the coming two years,” said Ian McCafferty, CBI chief economic advisor, “and this recovery – like that of the 80s – will be relatively drawn out.

“Credit conditions will remain difficult as the banks slowly nurse themselves back to health, consumer spending will be shaped by the need to rebuild savings, and the public sector will soon have to tighten its belt. All three factors will act as headwinds to growth.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .