How bad is it?
The recession is finally over, according to these figures, but the minimal 0.1 per cent growth was well below many economists’ forecasts, fuelling fears that the economy has failed to emerge from the downturn. There are also concerns that these initial estimates could be revised down still further. The main drivers of what anaemic growth there was were retail sales and motor trading, sectors that have benefited from temporary government stimulus packages
Is a double-dip inevitable?
Not necessarily, but it is a serious risk. The Government has little room for further stimulus packages and is under serious pressure to spend less in an attempt to repair the public finances. This would involve cutting public spending and raising taxes, placing further burdens on businesses and consumers. Unemployment is likely to continue rising and companies will not be in a good position to create new jobs until demand picks up significantly. It is quite possible that GDP could fall for one or two quarters this year. Technically GDP would need to fall for two consecutive quarters to be called a double-dip recession, but some economists have coined the term “mini-dip”, signalling a quarter of falling output after an exit from recession
Have we been here before?
Yes. In the recession in the early 1990s, the economy appeared to recover in the final quarter of 1991. After four consecutive quarters of negative growth, GDP rose by 0.1 per cent between October and December and a further 0.1 per cent in the first quarter of 1992, but then sank by 0.2 per cent in the third quarter. Only in the fourth quarter did the recovery get under way as the economy grew by 0.5 per cent
Is this the deepest and longest recession ever?
It is the longest recession since comparable quarterly records began in 1955, lasting for six consecutive quarters. GDP fell for five consecutive quarters in the early 1980s, with several quarters of contraction in 1979. The main falls in GDP from mid-1979 to 1981 showed a total drop in national output of nearly 6 per cent — the same as in this recession
Were we the last major economy in recession?
Nearly. While we are the last country in the G20 to emerge from recession, the Spanish and Greek economies are still in the doldrums
Why were we so slow to come out of recession?
Not only did our economy rely more on financial services than many others, but the problems in the banking sector and the collapse of Lehman Brothers also badly shook consumer confidence. This, coupled with the high levels of debt that many households had accumulated, led to a sharp drop in demand, which in turn took a heavy toll of businesses. The pain has been made worse by the dire state of the public finances