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| Version 8 | Version 9 |
|---|---|
| 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 news sent sterling to a 24-year low against the dollar, with one pound buying $1.3612. | The news sent sterling to a 24-year low against the dollar, with one pound buying $1.3612. |
| 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. | |
| '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 graphics class="" href="/1/hi/business/7831946.stm">How quickly could the UK recover? | |
| Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak, though December figures were better than expected, growing by 1.6%. | Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak, though December figures were better than expected, growing by 1.6%. |
| "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. |
| 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. |
| 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 | Injection |
| Efforts to prevent recession deepening have been widespread, though critics say they have not gone far enough. | 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. | 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. |