Britain 'heading out of recession'
Britain 'heading out of recession'
Wednesday 9th September 2009
Financial experts have claimed Britain may be climbing out of recession following the release of results showing growth in key parts of the economy.The National Institute for Economic and Social Research (Niesr) claims Britain has seen economic growth in the three months up to August.
Figures released this week show the manufacturing sector recorded its strongest growth for 18 months, with consumer confidence also recovering as the job market showed improvements for the first time in over a year.
The news led to stock market hitting record highs for the year on Thursday.
As a result, financial experts claim Britain's economy is now growing again for the first time in a year and a half, promoting suggestions that the worst recession since the second world war may now be over.
In a massive boost for prime minister Gordon Brown and chancellor Alistair Darling, Ray Barrell, the chief forecaster at the (Niesr), said the actions of the government and the Bank of England were largely to thank for the sooner-than-expected recovery.
The Bank has cut interest rates to 0.5 per cent, the lowest level in over 300 years, as well as embarking on an ambitious quantitative easing programme in an attempt to encourage growth in the economy.
The government has also implemented a successful car scrappage scheme, pioneered in Germany, which has seen drivers issued a £2,000 sum for scrapping cars over ten years old, with the money going towards the purchase of a new vehicle.
VAT has also been cut from 17.5 to 15 per cent.
Commenting on the measures, Mr Barrell said "We are expecting growth in both the third and fourth quarters of the year, although only an anaemic rate of 0.3 per cent or 0.4 per cent.
"It has been partly boosted by the fact that the car industry has been stronger than expected, thanks to the government's scrappage scheme. Then there will be a boost from the VAT cut in the final quarter of the year.
"In short, the government has been able to spend some of the money they were intending to spend."
He warned, however, not to get too carried away with the potential good news, claiming there were still tough times to come.
"This is not going to be a V-shaped recovery," he said.
"This is going to be very tough. It will take until late 2012 for the economy to return to the size it was at the peak in 2008. This will be a long, painful recession."
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