Official statistics show Britain still in longest recession ever

By Peter Barker

LONDON, Dec. 22 (Xinhua) -- Britain's Office for National Statistics (ONS) on Tuesday revealed that the country's economy shrank by 0.2 percent in the third quarter of 2009, officially making the recession the longest since records began.

The announcement was an improvement on the 0.4 percent quarter-on-quarter decline which the ONS, the British government's statistical body, first predicted a couple of months ago, and its 0.3 percent revised figure last month.

But it is final confirmation that the British economy has been in decline for a record six quarters in succession, the longest recession since records began in 1955.

The economy has now shrunk by 6.03 percent since the beginning of the second quarter of 2008.

Tuesday's figures were disappointing, and confounded the expectations of some economists that the figures would show the economy shrank by 0.1 percent or even remained unchanged at 0 percent.

This now confirms Britain's unwanted status as the last G20 economy still stuck in recession, with the United States, Japan, China and Germany all seeing growth in the third quarter.

Hopes that Britain's final 2009 Q3 figures would be more favorable were raised when the ONS first revised the figures to 0.3 percent on the back of a stronger-than-expected performance from the construction sector, which saw its biggest quarterly rise in more than six years.

However ONS figures showed that the gains in construction had been offset by slightly worse performances than expected in the manufacturing and services sectors.

This final Q3 figure illustrates how bumpy and slow the process of recovery is in Britain.

On Monday, The Confederation of British Industry, Britain's leading business organization which represents businesses employing a third of the private sector workforce, said 2009 Q4 growth would be 0.5 percent, backing the growth figure revealed in chancellor of the exchequer Alistair Darling's pre-budget report on December 9.

The CBI said subsequent growth in the first two quarters of 2010 will be weak at 0.3 percent, but this should strengthen as the global economic recovery gathers pace, businesses rebuild stocks and household spending recovers.

The CBI predicts growth in the range of 0.5 percent to 0.7 percent through to the end of 2011, giving annual GDP growth of 2.5 percent in 2011, following 1.2 percent in 2010.

This is at variance with chancellor Darling's PBR, where the chancellor made what many have regarded as too optimistic a forecast of growth of 1-1.5 percent in 2010, and 3.5 percent in 2011 and 2012.

And it is slightly more optimistic than the Organization for Economic Cooperation and Development which forecast in November growth of 1.2 and 2.2 percent for 2010 and 2011, and also the British Chambers of Commerce, which represents local businesses, which predicted growth of 1 percent in 2010 and 2.3 percent in 2011.

And there are signs that the fourth quarter figures may still suffer, despite Darling's and the CBI's confidence.

Earlier this month, the ONS itself said industrial production in Britain was unchanged in October (the first month of the fourth quarter) from the previous month.

Compared to the same month last year, production fell 8.4 percent. Economists had forecast a 0.4 percent monthly rise and a 7.7 percent year-on-year decline.

Manufacturing output was also flat in October, recording a 7.8 percent fall from the level seen in October 2008. Economists had forecast a 0.4 percent monthly rise and a 7.2 percent annual fall.

British people too are aware that the recovery road will be a rocky, and perhaps a long one. A poll for the European Union released last Friday showed that British consumer confidence fell for the second month in a row in November.

The month-on-month fall of two points in the GfK NOP Consumer Confidence poll to -19 is still massively better than the -37 in January this year, but a decline from October's optimism which saw the Index at -13.

The lack of consumer confidence was also evident in the retail figures for November, released on Thursday last week. Experts expected a modest rise month on month, but saw a 0.3 percent decline last month on October's figures. October had seen a 0.6 percent month-on-month rise.

Retail sales in December are likely to provide a solid boost to GDP growth in the fourth quarter, with Christmas shoppers hitting their bank cards in the run-up to the festive season. Visa, the country's largest debit and credit card company, said shoppers were largely using their debit cards, in other words spending money they had already got.

Shoppers rushing to buy goods at 15 percent Value Added Tax before the rise to 17.5 percent on January 1 are also likely to provide a strong boost to the economy.