British economy still in recession

Britain Is officially back in recession 2012 has begun badly. The economy shrank 0.3 per cent in the final quarter of 2011 and then another 0.2 per cent in the first quarter of 2012.

That marks a technical recession, something analysts had thought the UK would narrowly avoid. It also marks the first ‘double-dip’ recession since the economic turmoil of 1975.

And we’re certainly not there yet given the weak recovery – the economy saw below-par 2.1 per cent expansion in 2010 following a 7.1 per cent plunge during the Great Recession of 2009.

While recession this time is expected to be brief and mild – we could exit almost immediately – the overall economic situation is unlikely to dramatically improve any time soon. The median prediction from analysts is for growth of just 0.4 per cent for 2012 with the gloomiest forecasters predicting the economy.

The real fear is that austerity will combine with relatively high inflation, both of which take money out of the pocket of consumers, and hold back the economy. This could degenerate into dreaded stagflation – no economic growth combined with inflation.

http://www.economist.com/topics/british-economy

4 thoughts on “British economy still in recession

  1. European countries outside the single-currency zone like Britain may be counting their blessings for not joining the euro but tight trading and financial links mean that they are still being hurt by the crisis. My opinion is that, British growth will again be tepid in 2012 and progress in shrinking a supersized budget deficit will be disappointing.

    Reply
  2. Specially the construction sector with a strong decline of 3 percent (the strongest decline since 2009) The British currency almost immediately reacted negiatively to the bad news. The pound lost about 1.4 percent against the euro. The investors are waiting for what the time brings. But the consumers are also scared. The rising energy prices, cuts in government spending and a near freeze on the salary of officails from the government has a negative impact on the behaviour of consumers.Wages rose in the period from December to february with almost 1.1 percent which is less than a third of the inflation. The benefit of not joining the euro is that they can make their own decisions but they are dependent of the other countries. THe british government is still scrimping otherwise the public debt will be growing to much.

    Reply
  3. The British government must continue to make cuts and reevaluate there spending on public services if the country is going to recover from this downturn in the future.

    Reply

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