UK economic growth remains in negative territory as the recession drags on. Latest official data show that gross domestic product (GDP) decreased by 0.8% (PDF format, 100K) (external website) in the second quarter of 2009 compared with the first quarter. Yet this fifth successive quarterly fall in GDP growth can actually be interpreted as a comparatively positive development.
This is because the figures show that the pace at which the economy is shrinking has slowed considerably. The current rate of contraction compares with -2.4% in the first quarter of 2009, and -1.8% in the fourth quarter of 2008.
Many economic commentators expect that we could see things start to turn around once 2010 gets underway. Two new reports published earlier this week set out projections for GDP. These are as follows:
- GDP growth will run at -4.3% over the course of 2009, before showing a weak recovery to rise by 1% in 2010 (external website), according to the National Institute of Economic and Social Research (NIESR).
- The Ernst & Young ITEM club, meanwhile, believes that the UK's prospects for economic recovery over the coming year are "feeble" (PDF format, 238K) (external website), and that "there is still the chance of a serious relapse." In such circumstances, gross domestic product (GDP) is projected to fall by 4.5% in 2009, before recovering to grow by 0.5% in 2010. However, Ernst & Young additionally notes that UK economic recovery could be greatly hindered by a full-scale swine flu pandemic.
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