smallbusiness.co.uk: Helping your business think big

Although it may feel like we have been for some time, figures today reveal the economy is now officially in recession.

The widely accepted criteria of a recession – two consecutive quarters of negative growth – has been met according to figures from the Office for National Statistics (ONS).

Gross Domestic Product (GDP) contracted by 1.5 per cent in the fourth quarter of 2008, compared with a decrease of 0.6 per cent in the third quarter.

David Kern, chief economist at the British Chambers of Commerce (BCC), says: ‘The worse-than-expected decline in GDP not only confirms that the UK economy is in a recession, but it also highlights the critical need to persevere with forceful corrective measures.

‘While the short-term outlook is dire, it is important not to drift into excessive despondency. The government and Monetary Policy Committee (MPC) still have important weapons at their disposal, which they will undoubtedly deploy.’

He adds: ‘The huge stimulus package that the new [President Barrack Obama] administration plans to introduce could have beneficial global consequences.’

The ONS figures indicated that manufacturing output made the largest contribution to the slowdown, falling by 4.6 per cent compared with a 1.6 per cent decrease in the previous quarter.

The BCC is now forecasting a decline in UK GDP of 2.4 per cent for 2009.

There are currently no comments on this article