Friday, Oct 23, 2009
UK economy is still in recession
BBC News: UK economy is still in recession
The UK economy contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.
Posted by cat and canary @ 09:34 AM (2536 views) Add Comment
45 Comments
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1. cat and canary said...
Quoting from the ONS release...
(http://www.statistics.gov.uk/pdfdir/gdp1009.pdf)
"Distribution, hotels and restaurants, total production and construction showed a larger decline in overall growth compared with the previous quarter. Business services and finance and transport, storage and communication showed a smaller decline in overall growth compared with the previous quarter. Government and other services showed a very small increase in overall growth compared with the revious quarter.
Distribution, hotels and restaurants was the largest contributor to the negative growth this quarter. Total production and construction also had significant contributions to the decline."
the biggest improvements was in the finance sector. Surprise surprise, but which is still in negative territory
2. cynicalsoothsayer said...
HPC still on track then?
3. taffee said...
of course the 'market' has digested this and bounced on the basis interest rates will stay low and qe continue
This is gonna end in many tears imo.....its frightening
4. wdbeast said...
I am not surprised that these figures are reported as being so bad.
It is not politically the right time for a recovery yet.
These figures will allow extensive further Q/E to be voted in next month and that will ensure an end to "the great recession" just in time for the 2010 election campaign.
Oh what a cynic I am!
5. Xcojo said...
Doesn't really matter what the GDP figure is in real terms. Just means more QE which means more loans to homeowners. Simple lack of supply will mean house prices just keep rising. As soon as more landlords can afford the decreasing amount of equity needed to secure a loan they will continue to replace first time buyers.
6. uncle tom said...
There's been no market reaction to this - bit strange..
I have a strong hunch that the coming news on the housing front is going to be less than cheerful for the bulls, so I've just sold the last tranche of my Barratt holding - for over three times what I paid earlier this year..
Now, have I called a good time to sell..;-)
7. wdbeast said...
uncle tom - You have trebled your money, well done, I wish I had had the balls to buy some.
8. letthemfall said...
The fine wines are on uncle tom.
9. another alan said...
According to 'analysts' that the Today programme refered to this morning, these figures would show that the UK had moved out of recession.
We need to remember that these figures are based on record budget deficits (for which some blame we can attribute to the bankers (and we should NEVER forget this) and 'kitchen sink' monetary policy where base rates have been dropped to almost as low as they can go and the Bank of England have been creating money to buy assets in an attempt to flood the UK with money.
Because of this, even if today's figures demonstrated growth and meant that we were technically out of a recession, I would argue that we are still in on really.
(There are analogies of patients in comas, and receiving various treatments to keep them alive here.)
10. estrader said...
"The UK economy unexpectedly contracted by 0.4%"
The only people who didn't expect this were economists and experts. Although I must admit it is hard to remain a bear against such overwhelming positive propaganda. But I am convinced that not even governments have the power to fight conditions. Inflation, interest rates, debt, unemployment...they are juggling too many balls now.
11. smugdog said...
Glad to see a bit of bad news cheer you lot up. Perhaps if we have a total collapse of the economic system, you would be dancing ecstatically in the streets!! Absolutely priceless!
12. yorkshireman said...
Cheer up Taffee. Only this morning I read that mortgage approvals were up, so everything is alright with the world ??
13. cynicalsoothsayer said...
No, the market is reacting to this:
Sterling slides as UK GDP falls 0.4%
http://www.ft.com/cms/s/0/7303a1b2-bfae-11de-aed2-00144feab49a.html?ftcamp=rss&nclick_check=1
The pound fell 0.8 per cent to $1.6482 against the dollar, dropped 0.8 per cent to £0.9113 against the euro and lost 0.3 per cent to Y151.25 against the yen.
14. wiltshire said...
Oi! I thought the "fine wines" issue had been laid to rest! lol.
15. mark said...
the problem is the tears will be shed by the average person in the street, high taxes, cutbacks, job losses, did i say much higher taxes, decrease in standard of living as services are cut, probably once a month bin collections, more pot holes in roads, grass not getting cut, public toilets closed, libraries closing, litter on streets, increased parking and speeding fines, increase in vat, road tax, mot costs, DVLA costs, etc
this will make our lives hell for many years now..
how many people can afford a 10% drop in their income? I bet not many... I think the drop in income overall will be more like 20% to finance all these years of greed and corruption from an inept government run by fantasists , the fairies at the bottom of my garden could have done a better job than blair and brown
what did they promise??? No more boom and bust... hahahahaha can we sue them over this comment
16. fallingbuzzard said...
Of course the market is reacting. Sterling will lose a couple of percent on this.
17. cat and canary said...
Where is the green shoots and V-shaped recovery brigade?
-0.5% last quarter, -0.4% this quarter, full impact of unemployment to kick-in, already the longest recession since records began in 1955,
Sounds like L-shaped to me
18. jack c said...
Listening to the very early news bulletins this morning the expectation was that the UK would move out of recession - so to now release figures that show us mired in the worst downturn since detailed records began in the 1950's doesnt bode well. Residential house prices can't defy gravity forever !
19. Phil S said...
5. uncle tom
You speculate on the stock market and thats to be congratulated. Yet dare to do it with property and you're the worlds worst on this forum. Touch of hypocrisy there.
20. house said...
@10, smugdog,
I do not think people on this site are glad to see bad news or see economy failing but what most of us want to see fair play in the economy so that you can make informed decisions. Nobody on this site expected the interest rate to drop to the levels it has and QE to be introduced at the levels we have. Everybody now fear inflation in the future which makes savings useless.
FAIR PLAY is what we want. A level playing field.
21. Tpbeta said...
If anyone's counting the total contraction so far is 6.06%.
3.94% more and it's officially a depression.
22. ontheotherhand said...
smugdog, I want to see the bubbles deflate gently, then governments to stop deficit spending, and then sensible growth based on productivity factors. The 10 years of house price boom will take time to fade in people's memories and the last thing we all need is for a bubble to take off again. If it takes a few more quarters of recession to make people sensible then so be it. Too many people believed that getting educated and working for a living is for mugs when you can make an untaxed unearned gain on property. Let's get people training and working again so that GDP growth is from better trained people being empowered to produce more, rather than mortgage equity withdrawl funded spending on convertible cars and bling driving an illusory consumer spending GDP rise.
23. cynicalsoothsayer said...
BBC was saying before release the figures were expected to show we were out of recession. Who was expecting? Must be a bit of reverse psychology by those on high hoping the public will only hear the positive pre-spin.
24. techieman said...
"There's been no market reaction to this - bit strange.."
Why is that strange UT? The argument will be
1. IRs to be kept low - so costs of borrowings low
2. US markets have toyed with and found support @ 10,000.
Of course if the market had tanked then the reason would have been "still in recession against the odds".
Equally of course the pound has been a bit battered.
As Estrader says - risk is still to the upside, although if you are able to select specific shares (my fav was TW - a cheap optin on the HPC DCB) then power to your elbow.
25. Agentimmo said...
Another problem further down the line lies with the UK trading partners in the EU. If they continue to get modest growth in the next 2 quarters they might cut the bailouts. (eg. a lot of these cash-for-cars deals end in Dec). This could have the effect of plunging them back into a slump as the demand is just not there. UK companies would see exports stumble. It's a vicious circle.................
26. techieman said...
smuggy - you are getting a bit biased in your points here. Celebration of bad news? I think its more people want the "numbers" to reflect the reality of life.. But perhaps i am wrong.
27. goweresque said...
Don't forget inflation will start to rise over the coming months too as the effects of the high oil prices in 2008 fall out of the indices. That will spook the Forex markets and could lead to further falls in sterling, causing a downward spiral unless the BoE do something to halt it - ie reversing QE and/or raising rates, which they won't do because the politicians (of either hue) won't let them. Mark my words inflation will rise rapidly in 2010, while the economy stays pretty flat. Hello stagflation!
28. wiltshire said...
@10 Smugdog, you've had a few weeks now where you've been able to gloat a little at the "good" news from the VIs. You best get as much of it out of your system as quickly as you can because that feeling of smugness isn't going to last long.
This country is going to chance DRASTICALLY in the coming years - and not in a good way.
29. little professor said...
What a difference three hours makes:
BBC News, 7.42am: UK expected to exit its recession
Figures due later on Friday are expected to show that the UK economy grew slightly from July to September, meaning the recession is over.
The figure for Gross Domestic Product (GDP) from the Office for National Statistics (ONS) is likely to show the first economic growth since early 2008. The figure at 0930 BST is expected to show growth of between zero and 0.2%. BBC chief economics correspondent Hugh Pym says most City economists believe growth resumed in the third quarter of this year - although by as little as 0.2%
Quarterly growth would also reduce the annual rate of decline. In the three months from April to June the year-on-year decline was 5.5%, which was the sharpest annual contraction since quarterly records began in 1955.
If there is to be growth, it is likely to come from the service sector, where survey evidence has suggested that conditions have been improving.
But Thursday's retail sales figures, which showed that there was no growth in High Street activity in September, were worse than analysts had been expecting.
Also, industrial production figures showed a 2.5% fall in industrial output in August, which will weigh on the overall GDP figure.
30. Confusious said...
Longest recession ever and house prices are going up???????????????????
Could be the elite are buying up houses before the pound completely crashes.
31. 51ck-6-51x said...
W for nothing?
32. alan said...
It would be nice if the BBC reporting was more accurate and not biased and hyped.
For example the BBA have just said:
"Numbers of loans approved for house purchase are back to levels last seen at the end of 2007 and that increased activity is feeding through to increased mortgage lending. Other mortgage approvals remain subdued and households are generally cautious continuing to reduce their borrowing and build up deposits".
No prizes for what part the BBC will report. No point in reporting "caution"...oh no....just keep hyping house prices.
Even Nick Griffin commented on the BBC bias towards the left, yesterday evening, on Question Time. (Before you ask, NO, I'm not a member of his party).
33. cat and canary said...
Lets hope the recent drop in retail figures show that Brits are waking up to reality. I do believe the mindset is changing for the better, from talking to people. Its sad that it takes a very nasty downturn to do this. A bit of common sense regarding borrowing was all that was needed.
I think the BBC has yet to grasp that you can't talk up a market during a recession. Confidence measures and indexes and positive spin on data are one thing, but if the people can't pay, they wont pay.
The rescue of the financial system prevented catastrophy last year and changed the course of the downturn. But from this point onwards, I'm expecting a slow protracted turning of the screw.
Who knows, maybe soon joe-public will start thinking "wait a minute, those jimmy choo shoes are just a piece of wood, with a bit of leather and a brand. They're not really worth £1000!" But I doubt it! :)
34. timmy t said...
I'm sure I remember GB saying we'd be the first out of recession... about as accurate there as he was with his prediction of eradicating boom & bust! This has got to make you wonder how long QE and rock bottom interest rates are going to be here for. Our kids, their kids and their kids will be paying for this for years. And yet the FTSE is still up over 50 points - go figure!
35. techieman said...
talking of cat and canary... is your blog name anything to do with the pub in west india quay?
just wondered.
36. happy mondays said...
cat and canary said... "wait a minute, those jimmy choo shoes are just a piece of wood, with a bit of leather and a brand. They're not really worth £1000!" But I doubt it! :)
What ! But i have 7 pairs, 1 for each day .. Next your be telling me my paris hilton mankini is a rip off at £500..Get it together c&c..& lets hope house prices stay at the reasonable level they are..Affordable & quality built..
37. cat and canary said...
happy mondays! haha... even hugo boss in canary wharf has been having a 6-month long sale :) times must be hard!
---
techieman..yeah, its my local! rumbled! i nicked the name :)
..still the locals seem content enough! ..but of course they do!
i would buy a couple of them a pint every now and then - direct injection of taxpayer's money:)
...but they are usually too busy getting battered using the company plastic:)
38. fubar said...
Smugdog, It's not gloating at bad news. That's where your looking glass world view confuses you. The recent 'good' news has not been good news at all. House prices struggling to rise back into a bubble, at what point will you understand that a) housing is not an asset and b) Bubbles are a bad thing. The country has been bent out of all recognition by a falsehood i.e. easy credit. What I will personally dance about is a return to sensible monetary policy. If we could have that with something approaching honest politics that would be the icing on the cake. The end of conspicuous consumption and all of the destructive avaricious behaviour we've witnessed over the last eight to ten years is a good thing. Your 'good' news is only good for the greedy, the deluded and lying politicians. So yeah "Bad" news does make me feel optimistic that the country may be on the long slow and rough road to more sensible times when people on ordinary salaries can SAVE money AND afford to buy a house. I'd personally like to see the banks that took the risks be allowed to fail to get the process over with sooner rather than later in what is going to be a protracted series of convulsions lasting ten years or more. That's your 'good' news.
39. monty032 said...
The economy is now 5.9% smaller than it was at its peak, but government expenditure is, heroically, higher than ever. Full speed ahead and damn the torpedoes.
40. ontheotherhand said...
monty, 5.9% smaller means we need 6.2% growth from here just to recover. Trend growth historically has been 2% so it will take some time
41. kruador said...
We're in for a decade of this if we keep trying to prop the corpse up. To government: stop throwing gallons of petrol on this tiny spark of an economy. All that happens is that the petrol goes up in a fireball, and the spark gets ever smaller. Instead, you need to let it breathe, look after the tiny flame at the centre - and put up with one cold winter.
In other words, we need a seriously big crash to unwind all of the bad, unproductive, investment that happened through the 1999-2008 bubble, whether it be house prices, leveraged buyouts, commodities, you name it. It looked like it had started last year, but instead of just ripping off the band-aid, getting the pain over with quickly, we're trying to pull it off slowly and hurting for a long time.
42. Mrand Mrs Chris said...
I got up this morning to the news that the economy was about to exit recession and I said to my gut, "That's it, you're officially out of work. I don't care if you can't understand this "Good News" because you feel like you're in a recession, especially when you go to the shops, buy petrol and contemplate that staycation." My gut feeling, so reliable (apart from one or two youthful indiscretions), has been taking a battering recently from announcements declaring all was well. I recently stood in a David Wilson homes show room outside of Saffron Walden, to be told by a sales lady, "Haven't you heard, the recession's over". I wish I could have answered her back but this was just the opening salvo in a kind of frenzied wittering that didn't give me a chance to point out that technically it wasn't.
43. enuii said...
Anyone else noticed how tired and old Alistair Darling is looking these days; his 'economic confidence is returning' interview on the BBC revealed a remarkable lack of conviction in what he was.
http://newsvote.bbc.co.uk/1/hi/uk_politics/8322276.stm
44. mander said...
Mistake was that UK unlike US did not allow the price of assets to correct themselves. It is hoped that by the time US recovers UK will recover without assests correction and house prices will go from sky high to the moon.
45. crunchy said...
11. smugdog
You appear to be posting from a very high pedestal.
Some friendly advise, unless that imaginary platform you are stood upon is as high as it can possibly be, you will be shaft3d along with
everyone else. I would advise you to make the necessary plans. The top dogs will have no mercy when it comes to their true pay day.