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| UK economy braced for recession | UK economy braced for recession |
| (20 minutes later) | |
| Official figures due out are expected to show the UK economy shrank between July and September, confirming the country is on the brink of recession. | Official figures due out are expected to show the UK economy shrank between July and September, confirming the country is on the brink of recession. |
| Forecasts of Gross Domestic Product - the country's domestic economic output - suggest data will show a fall of between 0.1% and 0.5% in the period. | Forecasts of Gross Domestic Product - the country's domestic economic output - suggest data will show a fall of between 0.1% and 0.5% in the period. |
| The figures would mark the first period of negative growth since 1992. | The figures would mark the first period of negative growth since 1992. |
| Two consecutive quarters of negative growth are taken as the UK measure of being in recession. | Two consecutive quarters of negative growth are taken as the UK measure of being in recession. |
| Earlier this week, Bank of England governor Mervyn King and Prime Minister Gordon Brown both conceded a recession in the UK is likely. 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 | Earlier this week, Bank of England governor Mervyn King and Prime Minister Gordon Brown both conceded a recession in the UK is likely. 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 |
| Consumer distress | Consumer distress |
| The combination of the credit crunch, house price falls and rising unemployment is bashing the economy. | The combination of the credit crunch, house price falls and rising unemployment is bashing the economy. |
| The situation was "going to get worse before it got better", predicted Global Insight economist Howard Archer, who is expecting GDP to be -0.2%. | The situation was "going to get worse before it got better", predicted Global Insight economist Howard Archer, who is expecting GDP to be -0.2%. |
| He forecasts that this will be the first of three consecutive quarters of negative growth, followed by stagnation. This prediction foresees no growth until the last three months of 2009. | He forecasts that this will be the first of three consecutive quarters of negative growth, followed by stagnation. This prediction foresees no growth until the last three months of 2009. |
| "It's hard to see in the near term what's going to lead to an improvement," Mr Archer said. 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's hard to see in the near term what's going to lead to an improvement," Mr Archer said. 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? |
| "Unemployment is rising and will continue to do so, the housing market is going to drop further and share prices have tumbled. | "Unemployment is rising and will continue to do so, the housing market is going to drop further and share prices have tumbled. |
| "And even if the bank bail-out works, it is going to take some time before credit is more available, so the consumer is really constrained. | "And even if the bank bail-out works, it is going to take some time before credit is more available, so the consumer is really constrained. |
| "Even though inflation is coming down, there are a lot of factors that this cannot offset." | "Even though inflation is coming down, there are a lot of factors that this cannot offset." |
| A write-off | A write-off |
| The director of research at Deloitte, Ian Stewart, said that whatever the latest GDP figure was, the bigger picture suggested there might not be growth until 2010 at the earliest, leaving 2009 "effectively as a write-off". PREVIOUS SEVERE RECESSIONS 1974: 1.4% fall in GDP1975: 0.6% fall1980: 2.1% fall1981: 1.5% fall1991: 1.4% fall Annual GDP figures by market prices (Source: Official for National Statistics) Why do we need economic growth? href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5540&edition=2&ttl=20081024075255">Send us your comments | |
| "The distress in the banking system has made this very different to any recession we've seen before," he said. | "The distress in the banking system has made this very different to any recession we've seen before," he said. |
| "The previous two recessions have basically been down to inflation getting out of control. | "The previous two recessions have basically been down to inflation getting out of control. |
| "But here the tightness of credit means that even though interest rates are coming down, the cost of borrowing which consumers and businesses face is, if anything, going up." | "But here the tightness of credit means that even though interest rates are coming down, the cost of borrowing which consumers and businesses face is, if anything, going up." |
| Weak pound | Weak pound |
| In the second quarter of this year, between April and June, GDP was flat - meaning the economy stalled, showing no growth from the first quarter of 2008. | In the second quarter of this year, between April and June, GDP was flat - meaning the economy stalled, showing no growth from the first quarter of 2008. |
| It marked the end of a run of more than 15 years of consecutive growth. | It marked the end of a run of more than 15 years of consecutive growth. |
| The expectation of a recession has sent the pound sharply down against the US dollar, which has a five-year low. | The expectation of a recession has sent the pound sharply down against the US dollar, which has a five-year low. |
| Earlier this month, the Bank of England, in co-ordination with other central banks, trimmed interest rates by half a percentage point to 4.5% to try to stimulate the economy. | Earlier this month, the Bank of England, in co-ordination with other central banks, trimmed interest rates by half a percentage point to 4.5% to try to stimulate the economy. |
| This was despite inflation being more than twice the government's 2% target. | This was despite inflation being more than twice the government's 2% target. |