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Business

Britain not yet out of recession

Text by NEWS WIRES

Latest update : 2009-10-23

Official data for the third quarter showed that the British GDP has decreased by 0.4 percent, a hard blow for the country's economy as most of its European neighbours, including Germany and France, are climbing their way out of the recession.

AFP - Britain failed to climb out of its deep recession in the third quarter, when the country's output unexpectedly slumped by 0.4 percent, official data showed on Friday.

"Gross Domestic Product (GDP) decreased by 0.4 percent in the third quarter of 2009, compared with a decrease of 0.6 percent in the second quarter," the Office for National Statistics said in a statement.

Economists had expected Britain to exit recession in the July-September period with a return to growth of 0.2 percent after five quarters of shrinking output.

Britain had hoped to join France, Germany and Japan in exiting recession, defined as two consecutive quarters of contracting output, while the United States is expected to have returned to positive growth in the third quarter.

"UK third-quarter GDP is awful with no positive news within the report," said ING Bank analyst James Knightley.

"This is the sixth successive contraction in GDP, which is the longest run since the quarterly series began in 1955 with output now down 5.9 percent peak to trough."

Britain's economic recovery was already expected to be far from rosy ahead of a general election next year under the weight of mounting debt and unemployment.

The country's deficit ballooned to a record high in September as the public purse buckled under the weight of a recession that began in the second quarter of 2008.

Britain borrowed 77.3 billion pounds (84.8 billion euros, 127 billion dollars) between April and September -- the highest fiscal half-year amount since records began in 1946, official data showed on Tuesday.

Economists are warning that public borrowing this year would easily breach the government's official target of 175 billion pounds.

Meanwhile, the number of unemployed in Britain climbed by 210,000 to 2.47 million in the three months to July -- the highest level since May 1995.

It comes as the nation prepares for a general election due by mid-2010 and which is likely to see Prime Minister Gordon Brown's Labour government lose power to the main opposition Conservatives, according to polls.

The Bank of England has sought to combat the recession with record-low interest rates and a radical policy of quantitative easing -- pumping new cash into the economy to help kick-start lending to businesses and individuals.

Date created : 2009-10-23

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