Recession 'to end today as UK officially shows first green shoots'

Published on Thursday 22 October 2009 22:15

BRITAIN is expected to come out of recession today with the publication of official figures revealing that the economy has expanded for the first time since midway through last year.

Economic analysts have forecast that there will be a slight growth in GDP when the figures are released by the Office of National Statistics.

If predictions that GDP rose to 0.1 or 0.2 per cent in the third quarter of 2009 are accurate, it will mean that the UK economy has at least temporarily come out of recession.

The figures for the three months leading up to September were discussed in the House of Commons yesterday.

The shadow Treasury minister Greg Hands said that he expected the figures to show that the economy had emerged from recession.

But he maintained that the mountain of public debt built up by the government overshadowed any encouraging news contained in today's figures.

Mr Hands said the third quarter had seen "astonishing profligacy" from the government with borrowing running at 500 million a day.

Speaking during a short Commons debate, Mr Hands said: "We on this side have always said that we expect there to be growth in 2009.

"Nevertheless, even the predicted quarterly growth – and we will know for sure tomorrow – of 0.1 or 0.2 of 1 per cent still means that the economy has contracted by 4.7 per cent year on year, which I'm afraid is no cause for celebration at all.

"Moreover, whether there is a small amount of quarterly growth tomorrow or not, the figures are already overshadowed by the appalling numbers that reached us on Tuesday on government borrowing.

"Britain borrowed 14.8 billion in September, the highest total ever for that month, capping off a third quarter of astonishing profligacy by the Exchequer."

He added: "That is overspending by almost 500 million a day. That's like each taxpayer in Great Britain coming home each day and every day, saying they have just gone and borrowed another 20 without any sense of when the previous day's 20 is ever going to be repaid, let alone the interest on the previous borrowing."

A third-quarter positive figure for GDP – the total value of goods and services in the economy – would represent a significant turnaround for the economy. The second quarter of 2009 saw GDP fall by 0.8 per cent in the three months to June.

Britain officially entered recession for the first time since 1991 in January this year when the economy shrank at its fastest pace for nearly 30 years.

In January, figures for the last two quarters (the previous six months) recorded negative growth. Two or more consecutive quarters of contraction fulfil the economic definition of a recession.

Economic Secretary Ian Pearson said: "We, along with countries around the world, have stepped in to support our economy. In the 1930s, governments failed to act, with disastrous consequences.

"Unlike the Bourbon monarchy in today's Conservative Party, we have learned from the lessons of the past."

He attacked shadow chancellor George Osborne's judgment in dealing with the crisis, claiming his policies would "kill the recovery" by cutting support.