This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7686552.stm
The article has changed 21 times. There is an RSS feed of changes available.
| Version 12 | Version 13 |
|---|---|
| Recession looms as economy slows | Recession looms as economy slows |
| (10 minutes later) | |
| The economy shrank for the first time in 16 years between July and September, confirming that the UK is on the brink of recession. | The economy shrank for the first time in 16 years between July and September, confirming that the UK is on the brink of recession. |
| Output fell by 0.5%, according to the Office for National Statistics, a bigger-than-expected drop, knocking UK shares and weakening the pound. | |
| The UK will be classed as being in recession if the economy slows in the fourth quarter as well. | The UK will be classed as being in recession if the economy slows in the fourth quarter as well. |
| The Chancellor voiced confidence the UK would "get through" the slowdown. | The Chancellor voiced confidence the UK would "get through" the slowdown. |
| "It will be a difficult period, but I am absolutely confident we will get through it, " Alistair Darling said in an interview with the BBC. | "It will be a difficult period, but I am absolutely confident we will get through it, " Alistair Darling said in an interview with the BBC. |
| "We want to help people get through this period, putting more money in their pockets," he said, adding that the UK needs to work with other countries to make sure these efforts are replicated around the world. | "We want to help people get through this period, putting more money in their pockets," he said, adding that the UK needs to work with other countries to make sure these efforts are replicated around the world. |
| "We have also got to make sure in the medium term we live within our means," he said. | "We have also got to make sure in the medium term we live within our means," he said. |
| He blamed the fall in UK output on the credit crunch, falling house prices and rising energy prices, which have forced consumers to tighten their belts. | He blamed the fall in UK output on the credit crunch, falling house prices and rising energy prices, which have forced consumers to tighten their belts. |
| UK shares tumbled further on the news, down 8.5% at 3738.63 points in mid morning trade. | |
| The pound was also affected, falling to $1.5889 - the first time it has fallen below $1.60 in the past five years. | |
| Shock fall | Shock fall |
| The 0.5% fall in economic output is far greater than expected and increases expectations of further interest rate cuts from the current level of 4.5% to ignite growth. | The 0.5% fall in economic output is far greater than expected and increases expectations of further interest rate cuts from the current level of 4.5% to ignite growth. |
| It is the biggest drop in UK gross domestic product (GDP) since the first quarter of 1990 and is much greater than analysts had predicted. What's the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage Special report: The downturn | It is the biggest drop in UK gross domestic product (GDP) since the first quarter of 1990 and is much greater than analysts had predicted. What's the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage Special report: The downturn |
| GDP was 0.3% higher compared to the same period last year, the weakest rate of growth since the second quarter of 1992. | GDP was 0.3% higher compared to the same period last year, the weakest rate of growth since the second quarter of 1992. |
| The services sector - which represents three quarters of the UK economy - fell 0.4%, the biggest drop in 18 years. Within the services sector, hotels and restaurants saw the biggest fall, down 1.7%, compared with an increase of 0.2% in the previous quarter. | The services sector - which represents three quarters of the UK economy - fell 0.4%, the biggest drop in 18 years. Within the services sector, hotels and restaurants saw the biggest fall, down 1.7%, compared with an increase of 0.2% in the previous quarter. |
| Manufacturing output fell 1% while construction tumbled 0.8% compared to the previous quarter. | Manufacturing output fell 1% while construction tumbled 0.8% compared to the previous quarter. |
| Market fear | Market fear |
| Analysts expressed their shock at the news and their desire for aggressive rate cuts. | |
| "My comment to traders is dive, dive, dive," said Societe Generale's Brian Hilliard. | "My comment to traders is dive, dive, dive," said Societe Generale's Brian Hilliard. |
| DEFINING A RECESSION A recession is widely accepted as a decline in a country's domestic economic output or GDP for at least two consecutive quarters The layman's finance crisis glossaryQ&A: What is a recession? | |
| "It is a very emphatic entry into recession which underlines the need for dramatic rate cuts, which we think the Bank of England will deliver." He anticipated rates dropping to 2.5% by the middle of next year. | "It is a very emphatic entry into recession which underlines the need for dramatic rate cuts, which we think the Bank of England will deliver." He anticipated rates dropping to 2.5% by the middle of next year. |
| Rates could go as low as 3% by the middle of next year and possibly even lower, said UBS analyst Amit Kara. "The risks are that this is going to be a pretty severe recession." | Rates could go as low as 3% by the middle of next year and possibly even lower, said UBS analyst Amit Kara. "The risks are that this is going to be a pretty severe recession." |
| My comments to traders are dive, dive, dive Brian Hilliard, Societe Generale Read Robert Peston's blog | My comments to traders are dive, dive, dive Brian Hilliard, Societe Generale Read Robert Peston's blog |
| The 0.5% drop is "truly shocking", said Vicky Redwood, at Capital Economics, adding that she expected the economy to contract for about two years in total. | The 0.5% drop is "truly shocking", said Vicky Redwood, at Capital Economics, adding that she expected the economy to contract for about two years in total. |
| Describing the 0.5% drop as "truly dire", Investec's Philip Shaw said: "News since the end of September has hardly been encouraging and the UK may well experience a recession that is significantly deeper than we had expected before." | Describing the 0.5% drop as "truly dire", Investec's Philip Shaw said: "News since the end of September has hardly been encouraging and the UK may well experience a recession that is significantly deeper than we had expected before." |
| Global slowdown | Global slowdown |
| BBC economics editor Hugh Pym said there were worries that certain factors in the UK economy could make its downturn worse than those experienced elsewhere. | BBC economics editor Hugh Pym said there were worries that certain factors in the UK economy could make its downturn worse than those experienced elsewhere. |
| "The worry in the UK is has the housing market boom got out of hand," he said. | "The worry in the UK is has the housing market boom got out of hand," he said. |
| The slowdown in the UK comes as fears of a global recession pummel markets around the world. | The slowdown in the UK comes as fears of a global recession pummel markets around the world. |
| The banking crisis - which has seen lending fall and banks either nationalised or taken over as they struggle with bad debt - has hit economies around the world. | The banking crisis - which has seen lending fall and banks either nationalised or taken over as they struggle with bad debt - has hit economies around the world. |
| Ireland is already in recession, France is expected to fall into recession and commentators suggest that the US - the world's largest economy and consumer of much of the world's exports - is already in recession. | Ireland is already in recession, France is expected to fall into recession and commentators suggest that the US - the world's largest economy and consumer of much of the world's exports - is already in recession. |