Economy slides into recession
THE nation’s economy is officially in recession, government figures confirmed today.
Gross domestic product fell by 1.5% in the last quarter of 2008 after a 0.6% drop in the previous three months.
It is the first time since 1991 that the accepted criteria of a recession – two consecutive quarters of falling economic growth – have been met.
After a seeminly incessant round of bad economic news and the banking crisis continuing, the confirmation that we are in a recession is not a surprise, but the scale of the decline was.
The slump in GDP was the biggest quarter-on-quarter decline since 1980 and the frim data sent sterling to a 24-year low against the dollar, with one pound buying just $1.3612.
Meanwhile the FTSE 100 index fell almost 2%, below 4,000 points.
Business group the CBI said the statistics mean that this recession will be much worse than the slump witnessed in the early 1990s.
Deputy director general John Cridland: “The intensity and speed of falling demand combined with the global credit crunch mean this recession is going to be more painful than the early nineties, and sadly one consequence of this will be much higher unemployment.
“Looking ahead, we hope the impact of interest rate cuts, falling inflation, the fiscal stimulus and the Government’s recent measures to kick-start lending will have a stabilising effect later this year.”
Mark Rathbone, a partner at North West law firm Brabners Chaffe Street said: “It is likely that this recession will get a lot worse before it turns around.
“It is also likely that the availability of funds will never be the same as it has been in the last 15 years. It is therefore of paramount importance that businesses plan for the longer term when they will not have the ability to work their assets as efficiently to create greater availability of funds, whether for cash flow purposes or otherwise.”
