UK economy still shrinking
BRITAIN remained mired in recession in the third quarter of 2009, even if revisions to official data showed that the economy contracted at a slower pace than previously estimated.
The upward revision did not come as a shock to the City, which had widely expected the initial -0.4 per cent reading to be upgraded to -0.3 per cent by the Office for National Statistics (ONS).
The revision was a result of Britain’s services output shrinking at a slower rate than the ONS had estimated at the end of October.
The contraction in the UK economy, while other countries have returned to growth, has meant that all hopes are now pinned on Britain exiting recession in the fourth quarter.
But Bank of England Monetary Policy Committee (MPC) member Andrew Sentance yesterday told BBC radio that there are signs that the UK economy returned to growth in the second half of this year: an improvement in the international economy; a pick up in business services; a pick up in indicators of spending; and better news from the job market.
He added: “I think when we look back after a few years we will perhaps see that the economy did clearly begin to start growing in the second half of this year.”
But Jonathan Loynes at Capital Economics said that the second estimate of third quarter GDP did little to improve the near-term outlook for the UK economy. “The recession probably came to an end in the fourth quarter, but the recovery will be distinctly lacklustre.”