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UK sees fastest contraction since 1979
Source: Agencies |
April 25, 2009, Saturday
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THE British economy shrank in the first quarter at its sharpest rate since the early days of Margaret Thatcher's government 30 years ago, as the financial crisis continued to wreak havoc on banks, retailing and manufacturing.
In its first estimate for the January-March period, the United Kingdom Office for National Statistics said yesterday that gross domestic product contracted by a massive 1.9 percent from the previous three month period - the biggest drop since 2.4 percent posted in the third quarter of 1979.
That was far more than the 1.6 percent decline posted in the fourth quarter of 2008 and above analysts' expectations for a more modest 1.4 percent drop.
The latest decline means that Britain's economy has shrunk for three consecutive quarters and there are very few indications that things will improve in the near future.
Compared with a year ago, Britain's GDP was 6.2 percent lower in the first quarter, compared to the 4.9 percent year-on-year decline seen in the fourth quarter of 2008.
Earlier this week, the British government laid out the hope the economy will start to grow toward the end of this year but still forecast that output this year will shrink by a post-World War II record of 3.5 percent.
The average postwar recession in Britain has lasted for around 15 months, which would, if replicated during this current downturn, mean that the economy will continue contracting until the third quarter of this year.
However, most economists think this recession will last well into 2010.
"It's early days yet, but the drop opens up the possibility of GDP in 2009 as a whole falling by even more than the 4 percent we currently expect," said Vicky Redwood, an economist at Capital Economics.
According to the International Monetary Fund's latest forecasts, Britain will be one of the worst-hit economies because of its dependence on housing and financial sectors.
In its first estimate for the January-March period, the United Kingdom Office for National Statistics said yesterday that gross domestic product contracted by a massive 1.9 percent from the previous three month period - the biggest drop since 2.4 percent posted in the third quarter of 1979.
That was far more than the 1.6 percent decline posted in the fourth quarter of 2008 and above analysts' expectations for a more modest 1.4 percent drop.
The latest decline means that Britain's economy has shrunk for three consecutive quarters and there are very few indications that things will improve in the near future.
Compared with a year ago, Britain's GDP was 6.2 percent lower in the first quarter, compared to the 4.9 percent year-on-year decline seen in the fourth quarter of 2008.
Earlier this week, the British government laid out the hope the economy will start to grow toward the end of this year but still forecast that output this year will shrink by a post-World War II record of 3.5 percent.
The average postwar recession in Britain has lasted for around 15 months, which would, if replicated during this current downturn, mean that the economy will continue contracting until the third quarter of this year.
However, most economists think this recession will last well into 2010.
"It's early days yet, but the drop opens up the possibility of GDP in 2009 as a whole falling by even more than the 4 percent we currently expect," said Vicky Redwood, an economist at Capital Economics.
According to the International Monetary Fund's latest forecasts, Britain will be one of the worst-hit economies because of its dependence on housing and financial sectors.
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