The economic storm clouds continue to gather over Britain. The latest figures show the UK gross domestic product fell substantially more than expected in the last three months, increasing the evidence that Europe’s second largest economy is in recession.
However the British government is trying to be upbeat. Finance Minister Alistair Darling said: “Oil prices have halved in recent weeks, we’ve taken significant steps to deal with the banking problems and the credit crunch and we will get through this; I’m determined we will do everything we can to support the economy and also to ensure that we have sound public finances; so, yes it’s going to be difficult and it’s going to be tough, but we will get through it.”
The UK economy grew by an anaemic 0.3 percent in the first three months of this year, it was stagnant between April and June and shrank by half a percent in the third quarter. That is the first contraction in 16 years and the biggest quarterly fall since 1990.
Economists said the situation could be even worse in the fourth quarter given the fact that the escalation in the financial crisis only took hold in September.
The question now is how long will the recession last? “We are going to suffer three full quarters of GDP growth decline, but we knew it was going to happen, we are ready for it, and the authorities of course will take increasing action, in terms of bringing interest rates down to try and fight it,” said Howard Wheldon, Senior Strategist with BGC Partners.
The GDP figures are just the latest sign that the UK is heading into what economists feel will be a significantly deeper than previously predicted recession. Reports from retailers underline that. The John Lewis chain of department stores has just said it sales fell 7.6 percent on the year.