Economy 'no Longer In Free Fall'

[interestrateripoff]

http://news.bbc.co.uk/1/hi/business/8005439.stm

The economy is no longer in free fall and a recovery next spring is likely, a renowned economic think tank has said.

Stabilising markets and the easing of credit conditions may well mean that the worst of the recession is over, the Ernst & Young Item Club said.

It is forecasting the economy to shrink by 3.5% this year and by 0.1% in 2010.

However, it also said that the backdrop to Wednesday's Budget is "bleak" and warned that the chancellor has "limited options" in his spending plans.

In the Budget, Alistair Darling is expected to predict economic contraction of about 3% of GDP this year - up from his earlier forecast in November of between 0.75% to 1.25%.

The Item Club believes that the revival of the bond market in January has enabled the UK's strongest companies to gain access to credit.

It said its forecast was also encouraged by improved sentiment emerging in business surveys in the US, China and the UK.

Job losses

However, Peter Spencer, chief economic adviser to the Item Club, warned that the UK was not out of the woods yet.

"We face another 12 to 18 months of serious grief. Around 900,000 jobs will be lost this year and half a million next," he said.

He also predicted a gloomy next 12 months for the housing market and the high street.

World trade is expected to decline by 9% in 2009, he added.

So we will all have happy faces by next spring as the economy recovers.....

[interestrateripoff]

http://www.guardian.co.uk/business/2009/ap...recovery-upturn

Britain will drag itself out of recession before most of the rest of the world - but it will be next spring before recovery arrives, according to a report by the Ernst and Young Item Club, published today.

"We have got as much grief to come as we have behind us - it's just that falls in house prices and rises in unemployment will attenuate from here on out," said Peter Spencer, the report's author. He predicted that the economy would shrink by 3.5% this year, and a further 0.1% overall in 2010.

His relatively optimistic forecast comes amid a flurry of contradictory signals about when the worst will be over. Barack Obama has tried to talk up the chances of an early US recovery and Alistair Darling is determined to put a gloss on this week's budget, despite having to announce sharp cuts to his autumn growth forecasts.

"Governments have an incentive to make the economy appear more rosy than it may be," said Ken Wattret, chief eurozone-market economist at BNP Paribas in London.

Credit and equity markets are also showing signs of life, but ratings agencies such as Moody's are warning that up to a fifth of Europe's junk-rated companies could default this year. The IMF paints an even bleaker picture, warning last week that the world recession will be "unusually severe and long-lasting".

[interestrateripoff]

http://www.guardian.co.uk/business/2009/ap...sting-recession

More than half of the world's countries have been plunged into recession by the credit crunch, a higher proportion than at any time since 1960, according to the International Monetary Fund, which warns today that the downturn is likely to be "unusually severe and long-lasting", and will starve developing countries of resources.

As the world's finance ministers prepare to descend on Washington for the IMF's spring meetings next week, it offers a stark warning to politicians who claim to have spied green shoots.

"The combination of financial crisis and a globally synchronised downturn is likely to result in an unusually severe and long-lasting recession," the IMF says, in two key chapters of its twice-yearly World Economic Outlook, published today.

The IMF was given a major role in rebuilding the global economy after the crash at the G20 summit, when world leaders agreed to triple its resources, to $750bn (£503.4bn).

Comparing today's downturn to 15 recessions over the past 50 years, the IMF finds that downturns following financial crises tend to be longer-lasting, and the subsequent recovery is often weaker, as battered banks rebuild their balance sheets.

When many countries are involved, plunging into recession simultaneously, downturns also tend to be longer. This time, it finds that 65% of the world's countries are in recession – more than at any other time since 1960.

This toxic combination of banking collapse and synchronised recession leads the IMF to predict that the current recession is likely to be particularly painful, and it urges rich and poor countries to work together to build a co-ordinated response, instead of tackling crisis-hit countries one by one.

"Reducing individual country vulnerabilities cannot insulate emerging economies from a major financial shock in advanced economies," it says.

Emerging European countries such as Hungary, the Czech Republic and Ukraine are identified as particularly vulnerable, as the credit boom of the past decade turns to bust. Western banks expanded aggressively into these economies and, between them, emerging European countries have debts worth more than half the region's GDP.

And a few days ago we had this.

Anyone would the "experts" are clueless.

[starsky]

Thankfully his predictions have been spot on so far. I imagine we will see improvements in the economy at some point next year. But we won't have paid for this mess for a long time after. To some extent, there is a campaign to try and put a positive spin on things at the moment, which is understandable. Spin won't pay the bills though.

[Kazuya]

Recession over by Spring 2010, just in time for the General Election and for people to vote for NuNuLabour

[the end is a bit nigher]

Define improvement? If they mean that people will get their jobs back then dream on.

[Guest sillybear2]

What did the man who jumped off the top of a 20 storey building say to the guy on the balcony half way down? "So good so far!".