While most of feel that the economy in North America is bad, the effects of the recession across the Atlantic are no better. British financial statistics reveals that the economy shrank 0.4 percent in the 3rd quarter, indicating that hope from recovery of this prolonged recession is nowhere in sight.
For Britain this has been the 6th consecutive quarter where the Gross Domestic Product has dropped, taking the total loss of output since last year to 5.9 percent. These numbers indicate that Britain is in the grip of one the worst economic depression since the Statistic office began to collect recorded data nearly 50 years ago.
There was hope that the economy may contract but also grow judging by the demand for oil, but the news that the economy fell by 0.4 percent has come as shock to the soothsayers who predicted end of the recession.
The continual decline in economy persists despite massive attempts by the Bank of England to boost the economy; including maintaining interest rates at a record low down to 0.5 percent since March, an unparalleled injection of $290 billion into the money supply and billions extra have been shaved off through drastic economic actions.
The pound fell more than 1 cent to $1.65 after announcement by the statistics office as markets calculated in the possibility that the central bank of England will now boost the so-called “quantitative lessening program” – meaning purchasing assets from other banks to enhance the amount of money in the market — when it convenes in a few weeks.
Says, Arifa Sheikh –Usmani, an equity trader at Spreadex LTD, “Sterling is taking a hit on surprisingly weak GDP figures which means that the UK is not following France and Germany out of recession,”.
Bank of England governor Mervyn King and treasury chief Alistair Darling are hopeful that the economy will grow by the end of 2009. However, many economists have warned that despite the aggressive stimulus measures, the recession has intensified and unemployment continues to rise all over Britain. Friday’s numbers indicate that the hardest hit are hotel, restaurant and the service industry which fell 1 percent over the quarter.
Also noteworthy is that the industrial production in Britain fell by 13.7 percent since the recession began. Friday’s statistics were accumulated with approximately 40 percent of the necessary data and are subject to some minor deviations or changes in the preceding several months as more information from the statistics office become available. Of note is that the Statistic office’s initial GDP estimate for the previous April to June quarter was supposed to be shrinkage of 0.8 percent, which was soon after amended to a 0.6 percent drop once the exact numbers were available.