UK recession appears to be over

The UK recession ended in the last quarter of 2009.  This is according to the first official estimate of Gross Domestic Product, released today.  The economy grew by 0.1%, which means that GDP fell 3.2% in 2009.  This was a bit below expectations but still the move into postive territory is welcome.

 

It's worth looking back at previous recessions and recoveries.  The path to recovery tends to be bumpy with quarters of slow, no, or negative growth even after the first post-recession increase in GDP.  So we might expect the same this time, although this recession has been unusual in that sectors in the economy experienced a drop in confidence at around the same time last year.  So it is early days.

 

What does this mean for Labour?  Well, first imagine what the outcome would have been without any economic stimulus.  Or even worse, if the country had adopted Tory plans and put cuts in public spending in place last year, or even now.  So the thrust of economic policy is on the right lines; delivering a credible approach to public finances while not risking recovery.

 

Yet even if the economy has grown slightly, we must remember that it takes time to recover from a recession, and this one is the worst since the 1930s.  So it will take time for unemployment to fall and for businesses to get back to growth.  That's why economic policy needs to remain focused on economic growth.


Stephen Beer, 26/01/2010

 
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