Everyone’s been bandying round the recession bomb for the last year. But the UK wasn’t actually officially in recession. Officially a recession is two successive quarters of negative growth and today the inevitable has happened, the first since 1991. The announcement finally pours cold water on Gordon Brown’s 1999 pledge in his Pre-Budget Report that ‘Britain will not return to the boom and bust of the past’. We’ve had the boom, now hold on tight, here comes the bust.
So what does this mean? Nothing really, we’re just now allowed to use the term recession in the sense it was intended. The same economic climate prevails now we just have a nice little semantic bow with which to tie it up. What is worrying though is that the UK economy contracted by a worse-than expected margin - 1.5%. This is despite the reduction of VAT, bank bailouts and the financial stimulus package.
Other nice little statistics to make you grab for the razor blades is that GDP has had the largest drop since the dark days of 1980. In 1980, Britain was still recovering from the winter of discontent when there were mass-strikes and PM James Callaghan almost bankrupted the country. The parallels between then and now are indeed worrying to say the least.
As they say misery loves company and the UK can join the US, Japan and Germany who are also in recession. This is unlikely to be an exclusive group and membership is sure to swell in the coming year.
As well as recession, fall in GDP, there is another little issue: the pound hit a new low of $1.35. For anyone who has been abroad in the last month, the pound’s weakness in comparison to other countries will be of no surprise.
But don’t get too down, this novelty humping dog should cheer you up.
