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| UK in recession as economy slides | UK in recession as economy slides |
| (10 minutes later) | |
| The UK is now in recession for the first time since 1991, official government figures have confirmed. | The UK is now in recession for the first time since 1991, official government figures have confirmed. |
| Gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter. | Gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter. |
| That means that the widely accepted definition of a recession - two consecutive quarters of falling economic growth - has been met. | That means that the widely accepted definition of a recession - two consecutive quarters of falling economic growth - has been met. |
| It represents the biggest quarter-on-quarter decline since 1980, and a 1.8% fall on the same quarter a year ago. | It represents the biggest quarter-on-quarter decline since 1980, and a 1.8% fall on the same quarter a year ago. |
| The worse-than-expected contraction sent sterling to a 24-year low against the dollar, with one pound buying $1.3612. | The worse-than-expected contraction sent sterling to a 24-year low against the dollar, with one pound buying $1.3612. |
| Meanwhile the FTSE 100 index fell almost 2%, below 4,000 points. | Meanwhile the FTSE 100 index fell almost 2%, below 4,000 points. |
| 'Broad-based decline' | 'Broad-based decline' |
| The figures, from the Office for National Statistics (ONS), showed that manufacturing made the largest contribution to the slowdown, contracting by 4.6% after a 1.6% per cent decrease in the previous quarter. | The figures, from the Office for National Statistics (ONS), showed that manufacturing made the largest contribution to the slowdown, contracting by 4.6% after a 1.6% per cent decrease in the previous quarter. |
| However almost all elements of the economy shrank, the ONS said. | However almost all elements of the economy shrank, the ONS said. |
| The fall in GDP was slightly steeper than most analysts had been expecting, said the BBC's economics editor Stephanie Flanders | The fall in GDP was slightly steeper than most analysts had been expecting, said the BBC's economics editor Stephanie Flanders |
| "These figures suggest that it's not going to be done by Christmas," she said. | "These figures suggest that it's not going to be done by Christmas," she said. |
| The downturn was "broad-based" our economics editor added, saying that the bleak manufacturing data ended "any prospect of this being a white-collar recession that would largely escape manufacturers ". | The downturn was "broad-based" our economics editor added, saying that the bleak manufacturing data ended "any prospect of this being a white-collar recession that would largely escape manufacturers ". |
| 'Grim' | 'Grim' |
| What started as a crisis in the financial sector continues to infect the wider economy. | What started as a crisis in the financial sector continues to infect the wider economy. |
| RECORD QUARTERS Biggest post-war quarterly decline was -2.6% in Q2 1958 Largest drop in one quarter over previous year was -4.1% in Q4 1980 Worst fall in one quarter on previous year in 1990s recession was -2.2% in Q2 1991 Recession tracker: GDP in graphicsHow quickly could the UK recover?How to cope during the recession | RECORD QUARTERS Biggest post-war quarterly decline was -2.6% in Q2 1958 Largest drop in one quarter over previous year was -4.1% in Q4 1980 Worst fall in one quarter on previous year in 1990s recession was -2.2% in Q2 1991 Recession tracker: GDP in graphicsHow quickly could the UK recover?How to cope during the recession |
| Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak. | Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak. |
| And though December's retail figures were better than expected, growing by 1.6%, this was driven by heavy discounting and should be treated "with caution" the ONS said. | And though December's retail figures were better than expected, growing by 1.6%, this was driven by heavy discounting and should be treated "with caution" the ONS said. |
| "It is difficult to see why things should improve in the foreseeable future," said Andrew Smith, chief economist at KPMG. | "It is difficult to see why things should improve in the foreseeable future," said Andrew Smith, chief economist at KPMG. |
| Neil Mackinnon, chief economist at ECU Group, said the GDP figures were "grim" and underscored the depth of the recession. | Neil Mackinnon, chief economist at ECU Group, said the GDP figures were "grim" and underscored the depth of the recession. |
| "There are no green shoots of recovery, no light at the end of the tunnel," he added. | "There are no green shoots of recovery, no light at the end of the tunnel," he added. |
| The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five. | The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five. |
| In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s. | In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s. |
| Deteriorating picture | Deteriorating picture |
| GDP is the most commonly used indicator of national income. | GDP is the most commonly used indicator of national income. |
| Four leading economists told the BBC's Robert Peston what signs they will be looking for to signal that the worst is over. | Four leading economists told the BBC's Robert Peston what signs they will be looking for to signal that the worst is over. |
| It attempts to measure the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries. | It attempts to measure the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries. |
| The consensus forecast for 2009 as a whole is now for a 2.1% decline in GDP. | The consensus forecast for 2009 as a whole is now for a 2.1% decline in GDP. |
| As recently as December, the forecast was for a drop of 1.5%. | As recently as December, the forecast was for a drop of 1.5%. |
| This highlights the rapidly deteriorating economic picture over recent weeks, during which a number of the UK's best known high street retailers, such as Woolworths and Zavvi, have gone into administration. | This highlights the rapidly deteriorating economic picture over recent weeks, during which a number of the UK's best known high street retailers, such as Woolworths and Zavvi, have gone into administration. |
| As well as its low against the dollar, the pound has slumped against the euro and many analysts believe that parity is now inevitable. | As well as its low against the dollar, the pound has slumped against the euro and many analysts believe that parity is now inevitable. |
| International investors are said to be losing confidence in the UK economy and the government's attempts to kick-start lending from the banks. | International investors are said to be losing confidence in the UK economy and the government's attempts to kick-start lending from the banks. |
| The official government forecast is for the economy to shrink between 0.75% and 1.25% in 2009, although the Chancellor Alistair Darling has indicated that he will revise this figure in the Budget. | The official government forecast is for the economy to shrink between 0.75% and 1.25% in 2009, although the Chancellor Alistair Darling has indicated that he will revise this figure in the Budget. |
| Injection | Injection |
| Efforts to prevent the recession deepening have been widespread, though critics say they have not gone far enough. | Efforts to prevent the recession deepening have been widespread, though critics say they have not gone far enough. |
| The Bank of England has aggressively cut interest rates to 1.5% - aimed at driving down the cost of lending and making it easier for consumers and businesses to access credit. | The Bank of England has aggressively cut interest rates to 1.5% - aimed at driving down the cost of lending and making it easier for consumers and businesses to access credit. |
| However, banks have been reluctant to lend sufficiently, despite a £37bn injection into major banks, and a scheme to offer insurance to banks against potential losses on risky loans. | However, banks have been reluctant to lend sufficiently, despite a £37bn injection into major banks, and a scheme to offer insurance to banks against potential losses on risky loans. |
| A temporary cut in value added tax (VAT), from 17.5% to 15%, was an attempt to encourage consumers to spend and boost the retail sector and wider economy. | A temporary cut in value added tax (VAT), from 17.5% to 15%, was an attempt to encourage consumers to spend and boost the retail sector and wider economy. |
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