Is the recession over 
Tuesday, December 8, 2009, 08:38 PM
Well almost certainly. Hopes that Britain’s recession ended between July and September were boosted last week after official data from the Office of National Statistics revised upwards its assessment of construction activity. Contradicting its most recent estimates for third quarter GDP, the ONS said construction output rose by 2% as opposed to the 1.1% drop it had factored in. Overall this meant that GDP fell by only 0.1% in the three months to September and some economists believe that the economy may even have grown if further revisions are made to services sector data. Such a revision would
come as a boost to the government ahead of next year’s election, thought The Times. The UK is suffering its longest recession on record and is the only G20 nation not to have emerged from recession in the third quarter.
Indeed, Britain’s dominant service sector grew for the sixth consecutive month, according to data collated by the CIPS/Markit Purchasing Managers’ Index (PMI) - services account for around three-quarters of the country’s total economic output. Any figure above 50 indicates rising activity and the PMI reading for November was 56.6, albeit down slightly from the previous month. Looking ahead, the services sector could gain more traction with companies’ optimism about the business outlook climbing to 73.4, up from 71.4 in October. Analysts said that the data was consistent with economic growth
of about 0.5% in the final quarter of the year, which would mark the end of the recession.

Other data released last week was mixed. The Government’s expectation that the country will spend its way to economic recovery took a bit of a knock when it emerged that consumers had paid off more of their debts at a record rate in October.

Official figures showed that net consumer credit decreased by £579m as households cut back on new loans. The figures also showed that, despite the Bank of England’s £200bn programme of quantitative easing, the availability of new credit to businesses tightened too. There was better news on the home front though, with the number of new mortgages agreed edging up to its highest level since March 2008. Car sales too are racing ahead, thanks to the government’s £400m car-scrappage scheme – new car registrations surged by more than 57% last month as buyers rushed to take advantage of the ‘cash for
bangers’ scheme which is due to finish in February and also avoid the VAT rise due next month.

Whilst the scheme will have boosted manufacturer’s production it will not be enough to reverse the overall downward trend of the last 12 years – The Financial Times reported that according to ONS data, manufacturing now contributes just 12.4% of GDP compared to
20% in 1997.

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