UK Economy Still Fragile
UK Economy Still Fragile
by Marvin Brodeur
The United Kingdom has finally managed to get out of the largest recession since the 1930s - unfortunately growth is only at about 0.1% for the final quarter of 2009.
The forecast was slightly more optimistic at the city level where figures showed that there was an expansion of 0.4% over the same period. This figures mark an end to about six months of contraction, which saw the economy shrink by just over 5%.
As the country prepares for another election, this news couldn't have come at a better time for the Labour government under Gordon Brown. A spokesperson for chancellor Alistair Darling said that predictions of growth were coming along as planned. They went on to say that UK citizens could remain confident in the current government's financial planning.
George Osborne, the shadow chancellor said that these numbers were quite meager and that the Labour party had not been prepared for the recession, or the recovery period.
The financial markets in the UK saw losses after hearing about news of the end of the recession. Currencies such as the dollar and the euro went up against Sterling, and gilt futures also went up.
Vince Cable, the Liberal Democrat spokesman regarding Treasury said that progress is rather slow and that the economy will only stagger back into a growth period into 2010. He was not impressed with the Labour government's recent record.
Only a few economists are expecting the UK economy to recover due to the high percentages of government and consumer debt in the country. They also feel that the banking sector is rather fragile due to the events of the last couple years. There are some economists that forecast a quick rise but they are in the minority.
The director of the Chamber of Commerce for the UK, David Frost said that he felt this was a good step forward but that the country was far from being out of the woods.
Many analysts and economists feel that government support measures are what are holding the country up right now. The Bank of England bailouts and huge budget deficits are credited with keeping the country afloat in the later half of 2009.
The feeling among economy watchers is that the United Kingdom will stay fragile on a financial level, especially if support measures are dropped this year. Many economists say that expected growth would be around 1% per year in the next couple years - quite a bit lower than the usual 2.5% from the last few years.
The department responsible for National Statistics has said that the economic gains in October-December of 2009 show the recession is over but that doesn't mean things are looking up.
Economists at large firms like ING said that the UK had indeed excited recession "but barely." James Knightley, said that retail sales numbers have been nothing short of disappointing, as has consumer confidence. The average household debt problem remained very high and may continue for some time he went on to say.
The British Bankers' Association reported that consumer debt repayment was moving very slowly and that personal loan and overdrafts were on the rise. These are all signs that the recession is still taking its toll on the United Kingdom and that it may for some time.
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