Friday, 23 January 2009

Recession in UK now official

This is something we surely all knew about it but figures out today confirm that we are officially in a recession. Apparently it's all to do with having two consecutive quarters of declining output which we now have had. Gordon Brown has made much of the fact that we are in a global downturn and so we are because, for better or worse, this is now a global economy and the financial affairs of one developed country cannot be isolated from the others. It will be remembered that Brown used to talk about the UK being the country best prepared to withstand the global downturn, words that are likely to come back and haunt him. If it turns out that other economies are less affected by the recession blues than we are or that they come out of recession before we do then this will be something very much to Labour's detriment and something the opposition parties can really make hay on.

At the time of the pre-budget report last autumn many people including myself thought that Darling's suggestion that we would start coming out of recession later this year was hopelessly optimistic. I shall be interested to see just how much he revises his forecasts in the upcoming budget. Personally I think there will be a lot of egg on face.

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