UK economy continues to grow, says BCC

The UK economy continued to grow in the second quarter of this year, according to a survey by the British Chambers of Commerce (BCC).

The organisation, which collected data from 5,600 businesses across the country, predicted growth for the three months to the end of June of between 0.6% and 0.7%.

However, serious concerns over sustained recovery remained, it warned.

It found that the service sector presented the biggest worry.

The BCC's members reported sluggish growth in retail and services, which account for around three quarters of the country's gross domestic product.

Another, more tangible problem was the rising cost of raw materials, cited by 80% of its manufacturing members as putting pressure on prices.

UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

UK economy shrinking at fastest rate in more than 50 years

Downward revisions to official statistics show output fell 2.4% in the first three months of the year and the recession started three months earlier than thought

The recession facing Britain is even deeper than had been thought and started more than a year ago, it was revealed today.

National income fell in the first quarter of this year by 2.4%, the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%.

The figures are much worse than expected. Extended to the whole year, the drop in output in the January to March period is now equal to 4.9% – the worst since records began in 1948.

"We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought," said shadow chancellor George Osborne.

"This also means that in the future unemployment will be higher and Labour's debt crisis will be even worse."

Although GDP fell 2.4% in the third quarter of 1979 and first quarter of 1974, statisticians said these were rounded from 2.36% or 2.37%. The figure for this year was exactly 2.4%.

The revision is one of the biggest ever made by the ONS and it said the reasons were changes to its estimate of the construction and services sectors.

The ONS also revised down its figure for the second quarter of last year to -0.1% from zero, meaning the recession started earlier than previously thought. And the fourth quarter of 2008 figure was revised down to a fall of 1.8%.

"The recession, which now begins in the second quarter of 2008 rather than the third, is now thought to be quite a bit deeper than previously thought, and is looking ominously like the early 1980s vintage," said Danny Gabay of Fathom Consulting.

Critics of the Bank of England who called for big interest rate cuts in the first half of last year, will feel justified by the data, since the Bank's monetary policy committee argued into last autumn that there was little likelihood of a recession occurring and delayed rate cuts until October. In fact, the economy had entered one last spring.

Separately, the Trades Union Congress said that while there were signs of "green shoots" in the economy, this was more to do with an easing of the pace of the fall in output rather than that a big recovery was under way.

"This recession is already worse than the 1990s one and is likely to be worse than that of the 1980s," said Richard Excel, TUC labour market expert. "It has been very severe and we are probably only half way through. It will be quite some time until employment and growth return to pre-recession levels."

Paul Gregg, labour market expert from Bristol University, noted that unemployment had started rising earlier in this recession than in previous ones and was "encouraged" that monthly rises in the claimant count appeared to be slowing down.

sourced from The Guardian

Recession

rom recession in more than a decade and a half. One yardstick is at least two quarters of negative economic growth - and Britain has not had even one three-month period of falling output since 1992.

This unbroken record has allowed Gordon Brown to boast that the economy is enjoying its longest spell of sustained growth since the dawn of the Industrial Revolution in the 18th century, although reliable quarterly data has only been available for around half a century.

Some economists believe this definition of recession is flawed, since an economy would not be in recession if it contracted by 5% in the first quarter, expanded by 0.1% in each of the following two quarters and then contracted again by 5% in the fourth quarter.

It would, however, be deemed to be in recession if it grew by 5% in each of the first and fourth quarters but contracted by 0.1% in each of the second and third quarters. An alternative - and tougher definition - is a full calendar year of negative output.

Given the UK economy has grown on average by 2.5% over many decades, it is rare for gross domestic product (GDP) to fall on an annual basis. There have been only five such years since the end of the second world war: 1974, 1975, 1980, 1981 and 1991.

The United States has its own method of assessing recession, with the National Bureau of Economic Research's business cycle-dating committee making a judgment.

The NBER defines recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales". It has not given a definitive ruling on whether the United States is technically in recession now, but analysts believe that it will give its verdict soon.

sourced from The Guardian

Recession

rom recession in more than a decade and a half. One yardstick is at least two quarters of negative economic growth - and Britain has not had even one three-month period of falling output since 1992.

This unbroken record has allowed Gordon Brown to boast that the economy is enjoying its longest spell of sustained growth since the dawn of the Industrial Revolution in the 18th century, although reliable quarterly data has only been available for around half a century.

Some economists believe this definition of recession is flawed, since an economy would not be in recession if it contracted by 5% in the first quarter, expanded by 0.1% in each of the following two quarters and then contracted again by 5% in the fourth quarter.

It would, however, be deemed to be in recession if it grew by 5% in each of the first and fourth quarters but contracted by 0.1% in each of the second and third quarters. An alternative - and tougher definition - is a full calendar year of negative output.

Given the UK economy has grown on average by 2.5% over many decades, it is rare for gross domestic product (GDP) to fall on an annual basis. There have been only five such years since the end of the second world war: 1974, 1975, 1980, 1981 and 1991.

The United States has its own method of assessing recession, with the National Bureau of Economic Research's business cycle-dating committee making a judgment.

The NBER defines recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales". It has not given a definitive ruling on whether the United States is technically in recession now, but analysts believe that it will give its verdict soon.

sourced from The Guardian

Q&A: What is a recession?

The dreaded R-word - recession - is in the air as every day seems to bring more gloomy economic news.

Many commentators are now openly talking about the current slowdown turning into a recession.

But how do economists define a recession and when will we know if the UK is going through one?

What is the definition of a recession?

This is a thorny question on which experts still disagree.

However, technically speaking, the UK economy would slide into recession when it experiences two successive quarters of what is known as "negative growth".

For this to happen, the total amount of goods and services produced by the UK - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.

read full article at The BBC