Recession Is Over But Uncertainty Continues

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.

On the city level is was said that growth was around 0.4% but the entire country was only listed as increasing at 0.1% in the same period of 2009. During 2009, there were 6 months of consecutive economic shrinking and the total amount that it decreased was 6%.

The country is getting ready for an election in the coming year and the news of the end of the recession will be welcomed by the Labour government. Chancellor Alistair Darling’s spokesman said that this growth was exactly what the Labour party had predicted and he said that UK citizens could remain confident in the current government.

The shadow chancellor George Osborne was not as happy with these numbers and said they were less than impressive. He said the Labour party had been ill equipped for the recession as well as the recovery period.

After hearing news of the end of the recession, markets in the UK only declined. For example, the dollar and the euro both saw increases against the price of Sterling – not to mention an increase in gilt futures.

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.

The British Chamber of Commerce director David Frost felt that this was obviously a good sign – that things were moving in the right direction – but that the economy was still “far from being out of the woods.”

There were many economists and analysts around the UK that said the government support measures were responsible for any growth that had occurred and that without the bailouts and budget deficits, the country would be in rough shape.

Economy watchers in the UK say that things will be fragile for a while, especially if any of the government support measures decrease in the coming years. It’s expected that growth in 2010 will only be 1% and that it will take a while to get back to regular numbers (2.5%/year).

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.

Economists at large firms like ING said that the UK had indeed excited recession “but barely.” James Knightley, said that retail sales numbers have been nothing short of disappointing, as has consumer confidence. The average household debt problem remained very high and may continue for some time he went on to say.

The British Bankers’ Association (or BBA) said that people were paying back their consumer debt at a very slow rate compared to previous years and that overdrafts were commonplace. They went on to say that these kind of things meant that the UK would still be fighting off the effects of the recession for some time to come.

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