Monday, March 1st, 2010 at
5:53 pm
It was estimated that it was difficult for the UK economy to emerge from recession but it is quite surprising that they emerged from recession more quickly than originally estimated. It was shown by the new figures. In the second estimation of growth of economy by the Office for National Statistics shows that the gross domestic product of Britain grew 0.3pc in the final three months of the year. The City economist had fore-casted revised figure i.e. 0.2pc. So the figure shown by ONS is up from the first estimate growth and is also stronger than revised City economist rate. Difficult times for the UK economy
A better performance is shown by most part of the UK economy which helps it to emerge from recession quickly. Initially the estimated growth of economy was 0.1pc but now it has grown to 0.5pc because of the service sector that is the biggest part of the economy. Manufacturing also did well and it has also revised upward. It means the revised figure of industrial production grew to 0.4pc from the initial 0.1pc.
Gordon Brown detained this news as evidence that for sustainable recovery the UK government has continuously and successfully steered Britain. The revised figures for the UK economy come as the political debate intensifys over how to cut the deficit of the country’s record debt without destroying the recovery. According to George Osborne cultivating the deficit is a great way for sustaining the recovery while Labour thinks that it would tilt the country back into recession.
However this year the revised data shows a mixed picture for the UK economy because the retail sales and house prices suggest that the recovery of UK economy is already losing impetus. However The Bank of England and the Treasury are both expecting the growth of UK economy more than 1.5pc this year. Economists are also divided equally on how to tackle the UK deficit.
They are worried that, not only will the growth not support the economy of UK, the fiscal deficit will make the country vulnerable to economic crisis. This may lead to adjustments of rates on a long term basis as well as more financial difficulty.
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Monday, March 1st, 2010 at
5:45 pm
After the government figures of the final three months of 2009 were released there was a dramatic 6% fall in business investment and the initial estimate of growth in the quarter four 2009 was just only 0.1%. It is not good news. Because of this Britain was not able to emerge from recession in late 2009.
The worst news is that in order to recover from the longest recession of the UK economy since 1930s, a catastrophic 24% drop in investment in the past year retains the economy of UK in a weak state. This recovery is done on the basis of rebalancing of growth from utilization and consumption to investment and exports.
The Office for National Statistics released its gross domestic first revision in the fourth quarter of last year in order to calculate how well the economy did in the last year. The next morning the City had the confidence that there would be an upward revision tomorrow because the manufacturing sector did better in late 2009 than originally believed.
One bit of good news for the government is that the investments done are only to show up the third estimate of growth of Office for National Statistics. In this way, it is unlikely that tomorrow’s data will display a sharp fall of 0.3% or 0.4% during the quarter four 2009. However it is temporary, unless the fresh data is strong enough in order to balance the obstacle from investment.
However it is important to remember that there were some excellent factors especially the incentives for consumers who purchased big ticket items before the end of VAT holiday that led to the growth in the quarter four 2009. But this consumption was borrowed from early 2010 and thus the figures for the first quarter of 2009 are not precisely brilliant either. In late April the first estimate of growth in this period was published. It can be the most important piece of information as it comes out at the time of the general election campaign.
Between the fourth quarter of 2008 and 2009 the manufacturing investment in UK dropped by 35% and thus it is suggested that UK industry will not be able to benefit from the rising global demand. Due to this it may be difficult for the UK economy to emerge from the recession even after the release of its first estimate growth in April in this year.
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