Britain’s economy emerged from recession in the final quarter of 2009, growing for the first time in 18 months.
However, while the end of recession is welcome news, GDP growth of just 0.1% has disappointed some City commentators, who were expecting a more robust recovery. The FTSE 100 dipped slightly and the pound fell against the US dollar and the euro. The Office for National Statistics (ONS) release revealed that GDP for the whole of 2009 fell by 3.2%.
There were few clear drivers in the growth of GDP. Distribution, hotels and restaurants were identified by ONS as the largest contributors. Both service industries and production industries increased by 0.1%. Manufacturing was up by 0.4%, mining and quarrying up by 0.1%. Electricity, gas and water decreased by 3.3% over the same period. Construction growth remained ‘flat’, as did transport and storage.
In the business services and finance sector, the most significant contribution was from real estate. This was offset by a negative contribution from banking. Government spending was up by 0.2%, with health the largest contributor to the increase.
Responding to the latest GDP figures, the Chancellor of the Exchequer, Alistair Darling said, ‘I think we are now on a path to recovery.’ Others were less sure, with Shadow Chancellor George Osborne saying, ‘After this great recession, any signs of growth are welcome. But, these very weak growth figures show that Gordon Brown’s Government left us badly prepared for the recession and badly prepared for the recovery.’
The Liberal Democrat spokesman, Vince Cable was quoted as saying, ‘The British economy has had the economic equivalent of a heart attack. It is still fragile. It is still dependent on artificial money creation, on enormous government deficit, the banks are still not working properly.’
If you’re still struggling from the economic downturn, read our guide on how to recession proof your finances.
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