United Kingdom out of recession, but only just
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Britain emerged from a recession in the fourth quarter of 2009, but only just and with a far weaker growth rate than expected, data has shown, suggesting any monetary tightening remains a long way off.
REUTERS - Britain came out of recession in the fourth quarter of 2009, but only just and with a far weaker growth rate than expected, data showed on Tuesday, suggesting any monetary tightening remains a long way off.
The Office for National Statistics said gross domesticproduct rose by 0.1 percent between October and December, well below analysts’ forecasts for growth of 0.4 percent after an18-month recession which wiped out 6.0 percent of output.
Output was still 3.2 percent lower on the same period a year ago and overall GDP fell by a record 4.8 percent in 2009.
While news that Britain is finally out of recession may boost consumer confidence, the sluggish recovery is still likely to weigh on Labour Prime Minister Gordon Brown’s chances of winning a parliamentary election expected in 100 days.
While Brown has regularly argued that his decisions have helped Britain weather the global storm, the UK is the last of the major economies to exit the downturn.
The latest figures may increase doubts about the pace of global recovery as Britain is also the first G7 country to report GDP figures for the fourth quarter.
From peak to trough, the recession was far worse than the downturns of the early 980s and 1990s and policymakers expect a long slog to get the economy back to pre-crisis levels.
Most analysts predict the Bank of England to halt its 200 billion pound asset buying programme next month but Tuesday’s GDP figures are likely to boost expectations that any interest rate rises from the current record low are many months away.
The ONS said the latest increase in output was mainly due to increases in the distribution, hotels and restaurants sector and government and other services.
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