Last month the release of the May data led to exuberant claims the recession was past the trough and according to some, the recession ended in February. On this occasion the statement reads “It remains our view the UK economy is now stagnating rather than continuing to contract at a sharp pace." So no recovery, no green shoots but "stagnation for the nation".
The Times was mortified. “Hopes that the UK recession ended in the second quarter were dealt a further blow today as one of the country's leading economic institutions forecast that GDP fell between April and June.”
Did anyone really believe the recession ended in the second quarter? I hope not. According to the NIESR data, the UK economy contracted by some 5% in the first quarter of 2009 and by 5.2% in the second quarter. (Year on year basis).
GDP is continuing to fall at a dramatic rate even worse than the first quarter decline according to the data. The recession isn’t over yet by a long way. The UK is dependent on a recovery in the US economy and in world trade. Gordon Brown is warning of a protracted recession blaming oil price rises as the reason for the second coming.
Oil is not to blame. Policy hopes for recovery are based on the three S’s, Sterling, Stimulus and Stock changes. It is not enough, and the NIESR fast track figures provide evidence of this.
NIESR June Estimates of Monthly GDP.
The Times : Economists quash hopes of end to the recession.
*JKA : NIESR - UK GDP May, no recovery, no revival, no green shoots
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