Finally, Britain, the third-largest
economy in Europe, technically
emerged out of recession, ending six quarters of negative growth. It
has been Britain's deepest and longest recession since the World War II. For
the quarter ended in December 2009, Gross Domestic Product (GDP)
grew by a feeble 0.1%, compared with the previous quarter, the Office for
National Statistics (ONS) said in a preliminary estimate. The sluggish
GDP growth for the last quarter of 2009 was well below the economists'
expectation of 0.4%. Britain was the last major country still caught in
recession, brought about by the unprecedented global financial crisis and
exacerbated by huge public borrowing that has left it with a ballooning
budget deficits of £178 bn. Britain's European neighbors, Germany and
France, came out of recession six months before it. Other industrialized
nations such as Japan and the US also emerged out of recession before
the UK. The economy of the UK, pedantically emerged out of recession
(recession is technically defined as a decline in GDP for two or more
consecutive quarters) very late, because it was more dependent on the banking
sector and housing prices rises than other countries. It was well behind
its big European neighbors because its households were carrying more debts
and because the public exchequer ruled out a bigger stimulus package to
effectively counter the crisis.
Economists attribute a combination of temporary measures such as
fiscal stimulus packages (not to the same extent as other big developed
nations who were in recession) and quantitative easing policy which helped the
economy to return to growth, though frail. Government's car scrappage
scheme, lower value-added tax and stamp duty holiday, helped the economy move out
of recession. However, the experts caution that once these temporary stimuli
are taken off, growth may dissipate again. The ONS data reveal that both
services and total production rose by 0.1% in the fourth quarter. In the services, the
big lift came from distribution, hotels and restaurants, which were up by
0.4%. Government and other services output rose by 0.2%. In particular,
manufacturing gained by 0.4%, but utilities output declined by 3.3%. The UK
unemployment level declined for the first time in 18 months.
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