Britain officially exited the recession in the fourth quarter of 2009 but the country is still struggling to regain its footing after the largest recession since the 1930s.
The forecast was slightly more optimistic at the city level where figures showed that there was an expansion of 0.4% over the same period. This figures mark an end to about six months of contraction, which saw the economy shrink by just over 5%.
As the country prepares for another election, this news couldn’t have come at a better time for the Labour government under Gordon Brown. A spokesperson for chancellor Alistair Darling said that predictions of growth were coming along as planned. They went on to say that UK citizens could remain confident in the current government’s financial planning.
George Osborne, the person with the role of shadow chancellor said he was not impressed with the numbers and said that the Labour party had not been ready for the recession. Osborne said that they had not done enough when the recession hit as well.
The financial markets in the UK saw losses after hearing about news of the end of the recession. Currencies such as the dollar and the euro went up against Sterling, and gilt futures also went up.
Vince Cable, the Liberal Democrat spokesman regarding Treasury said that progress is rather slow and that the economy will only stagger back into a growth period into 2010. He was not impressed with the Labour government’s recent record.
There were a few economists that felt the increase would move quickly but they were definitely in the minority. It was expected that consumer debt and debt taken on by the government would slow down any extended efforts by the economy to pick up. Economists also felt that the banking sector was too fragile at this time.
David Frost, director of the UK Chamber of Commerce said that this was a great start but that the UK was still not on the straight and narrow as far as finances were concerned.
A number of analysts throughout the UK believe that there is only “some growth” because of the extensive support measures made by the Bank of England. They also pointed to huge budget deficits that could also be the cause of these gains.
The feeling among economy watchers is that the United Kingdom will stay fragile on a financial level, especially if support measures are dropped this year. Many economists say that expected growth would be around 1% per year in the next couple years – quite a bit lower than the usual 2.5% from the last few years.
The Office for National Statistics revealed a report this week that shows very low gains in October-December of 2009 but it still did signify the end of the recession.
ING official, James Knightley said that the United Kingdom had just barely exited the recession and said that retail sales numbers over the final quarter of 2009 were sluggish compared to years past. He said that consumer confidence was also very low and that debt problems were still rampant across the country.
The British Bankers’ Association reported that consumer debt repayment was moving very slowly and that personal loan and overdrafts were on the rise. These are all signs that the recession is still taking its toll on the United Kingdom and that it may for some time.
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