Recession confirmed, economic outlook 'dire'
Article Date: Jan 23 2009
GDP shrank by 1.5% last quarter
The Office of National Statistics (ONS) has confirmed the UK is in recession by announcing a second consecutive quarter of negative growth.
The figures, which are unlikely to surprise anybody, show that Gross Domestic Product (GDP) contracted by 1.5 per cent in the fourth quarter of 2008, compared with a decrease of 0.6 per cent in the third quarter.
David Kern, chief economist at the British Chambers of Commerce (BCC), says: ‘The worse-than-expected decline in GDP not only confirms that the UK economy is in a recession, but it also highlights the critical need to persevere with forceful corrective measures.
‘While the short-term outlook is dire, it is important not to drift into excessive despondency. The government and Monetary Policy Committee (MPC) still have important weapons at their disposal, which they will undoubtedly deploy.’
He adds: ‘The huge stimulus package that the new [President Barrack Obama] administration plans to introduce could have beneficial global consequences.’
The ONS figures indicated that manufacturing output made the largest contribution to the slowdown, falling by 4.6 per cent compared with a 1.6 per cent decrease in the previous quarter.
The BCC is now forecasting a decline in UK GDP of 2.4 per cent for 2009.
