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| Version 3 | Version 4 |
|---|---|
| Data set to confirm UK recession | Data set to confirm UK recession |
| (40 minutes later) | |
| Official output data due later is expected to confirm that the UK is in a recession - in line with what economists have been saying for months. | |
| The figures are forecast to show the UK has experienced two consecutive quarters of negative economic growth. | The figures are forecast to show the UK has experienced two consecutive quarters of negative economic growth. |
| Gross domestic product is predicted to have fallen by 1.2% in 2008's final quarter, following on from a 0.6% contraction in the previous quarter. | Gross domestic product is predicted to have fallen by 1.2% in 2008's final quarter, following on from a 0.6% contraction in the previous quarter. |
| This would represent the biggest decline since 1990's third-quarter. | This would represent the biggest decline since 1990's third-quarter. |
| Although recession is widely regarded as two consecutive quarters of negative economic growth - many analysts expect that there will be a year-on-year decline in GDP. | |
| If the consensus is right, the figure will also represent a 1.4% decline on the same quarter a year ago - the biggest year-on-year fall since 1991. | If the consensus is right, the figure will also represent a 1.4% decline on the same quarter a year ago - the biggest year-on-year fall since 1991. |
| 'Grim figures' | 'Grim figures' |
| "A sharp fall in manufacturing output - down 3% in November alone - has led to fears that the decline in total GDP in the fourth quarter will exceed the 1% fall previously pencilled in by analysts," said Andrew Smith, chief economist at KPMG. | "A sharp fall in manufacturing output - down 3% in November alone - has led to fears that the decline in total GDP in the fourth quarter will exceed the 1% fall previously pencilled in by analysts," said Andrew Smith, chief economist at KPMG. |
| 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 1958Largest drop in one quarter over previous year was -4.1% in Q4 1980Worst fall in one quarter on previous year in 1990s recession was -2.2% in Q2 1991 | RECORD QUARTERS Biggest post-war quarterly decline was -2.6% in Q2 1958Largest drop in one quarter over previous year was -4.1% in Q4 1980Worst fall in one quarter on previous year in 1990s recession was -2.2% in Q2 1991 |
| Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak, with December figures also out later not expected to reveal much cheer on Britain's High Street. | |
| "It is difficult to see why things should improve in the foreseeable future," Mr Smith said. | "It is difficult to see why things should improve in the foreseeable future," Mr Smith said. |
| Neil Mackinnon, chief economist at ECU Group, said the GDP figures would "be grim and underscore the depth of the recession". | |
| "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. |
| 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. |
| The pound has slumped against the euro and many analysts believe that parity is now inevitable. Sterling also hit a seven-year low against the dollar this week. | The pound has slumped against the euro and many analysts believe that parity is now inevitable. Sterling also hit a seven-year low against the dollar this week. |
| 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 a decline of 0.75% to 1.25% in 2009, although the Chancellor Alistair Darling has indicated that he will revising this figure in the Budget. | The official government forecast is for a decline of 0.75% to 1.25% in 2009, although the Chancellor Alistair Darling has indicated that he will revising this figure in the Budget. |
| Injection | |
| Efforts to prevent 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. | |
| 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. |