Today’s official figures giving news of the falling economy which is
in recession, even if we have to wait another 3 months to prove it !
The figures are worse than predicted and hopefully will stop the
politicians and the media distracting us all with silly behaviour and
even sillier stories lacking in any substantive facts of a foolish
Tory trusting the most the most untrustworthy man in politics.
There’s a crisis on so stop playing games! (see Jeff Randall which I
will post later)
The basic story is in the BBC report below so I have made a cuts in
other reports to avoid too much duplication.
But first the Tory reaction - - - - -
xxxxxxxxxxxxx cs
===========================
CONSERVATIVE HOME Blog 24.10.08
George Osborne
As GDP figures show Britain's economy contracted by 0.5% in the last
quarter, George Osborne has attacked the government for its role in
current economic difficulties:
"Everyone was expecting a bad figure but this is much worse. It shows
that millions of British families are in for a very difficult time in
the months ahead. Conservatives will do everything to help people cope.
"It is a defining moment in the record of Gordon Brown. The day that
we can all see that the central claims he made over ten years, that
he had abolished boom and bust and therefore didn't need to set aside
money for a rainy day has been shown to be completely false.
“Sadly it will be millions of families, pensioners and companies that
will pay the price for Labour's failure to prepare for this moment."
===========================
BBC ONLINE 24.10.08
Recession looms as economy slows
The economy shrank for the first time in 16 years between July and
September, confirming that the UK is on the brink of recession.
Economic output fell by 0.5%, according to the Office for National
Statistics, amid fears of a global slowdown and huge volatility on
world share markets.
The UK will be classed as being in recession if the economy slows in
the fourth quarter as well.
The credit crisis has forced consumers to tighten their belts.
Shock fall
The fall 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 is the biggest fall in UK gross domestic product (GDP)
since the first quarter of 1990 and is much greater than analysts had
predicted.
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.
Manufacturing output fell 1% while construction tumbled 0.8% compared
to the previous quarter.
Market fear
UK shares tumbled further on the news, down 6% at 3843 points just
after the release of the data.
The pound was also affected, falling to $1.5889 - the first time it
has fallen below $1.60 in the past five years.
"My comment to traders is dive, dive, dive," said Societe Generale's
Brian Hilliard.
"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."
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."
Global slowdown
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.
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.
Correspondents fear that the slowdown may hit the UK harder than
other countries.
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?
Has the growth in personal debt added to the problems?" he said.
=======================
THE TIMES 24.10.08
Bleak growth figures show Britain on brink of recession
Gary Duncan, Economics Editor
Britain’s economy shrank in the three months to September for the
first time in 16 years, all but confirming that it is now in the grip
of its first recession since the early Nineties.
Bleak official GDP figures showing that national income plunged by
0.5 per cent in the three months to the end of September, in the
sharpest drop since the end of 1990, revealed that the toll from the
credit crisis and housing crash has ended Britain’s longest unbroken
run of quarterly growth since at least 1955.
The drop in GDP in the third quarter came after the economy
stagnated, with zero growth, in the previous three months.
Today's worst-than-expected fall in GDP sent the pounds tumbling to a
new five year low of $1.5616 against the dollar while London's FTSE
100 index of leading shares lost 6.3 per cent, or 258.86 points, to
3,828.97.
With output and income across the economy now set to suffer a
further, almost inevitable fall in the present quarter, Britain is
almost certainly already in recession. But formal confirmation of
that will not now come until release of GDP figures for the October
to December period, due early next year.
Both the Prime Minister and Mervyn King, the Governor of the Bank of
England, admitted for the first time earlier this week that the
economy was probably entering a recession.
The detail of yesterday's figures added to the grim picture, showing
every part of the economy except the farming, fishing and forestry
industries is now in decline. Over the past three months,
manufacturing shrank by 1 per cent, output from utilities fell by 1
per cent, construction contracted by 0.8 per cent, and the vast
services sector, which makes up three-quarters of the economy, shrank
by 0.4 per cent.
The threat of a consumer-led recession was emphasised as, within
services, the retail, wholesale, hotels and restaurants sector
slumped by a drastic 1.7 per cent in the third quarter.
Many economists are now warning that the resulting slump in the
economy could be as deep and painful as that suffered in the early
Nineties, rather than merely a “technical recession” with two
quarters of falling GDP.
George Magnus, senior economic adviser at UBS, said last night: "The
early indications of recession from the third quarter I don't think
will be that compelling. But this is only the beginning.
"I think this recession is going to go on for quite a long time,
perhaps through next year, maybe even to the beginning of 2010. And
in that sense, it is going to look quite nasty, compared with the two
recessions that we had at the beginning of the Eighties and the
beginning of the Nineties. "
Sushil Wadhwani, a former member of the Bank of England's Monetary
Policy Committee said
"I think this is a very different situation [from the Eighties and
Nineties}. I think the fourth quarter and the first quarter of next
year we are likely to see a remarkably steep downturn. That is what
history suggests happens when finance to small and medium sized firms
is restricted.
"I think we are going to end up being surprised by the suddenness by
which output drops over the next two quarters. I think the numbers
over the next two quarters are likely to be rather worse than the
consensus is looking at and it could turn out to be quite frightening
in terms of its impact on confidence."
The influential National Institute of Economic and Social Research
(NIESR) predicted this week that the economy will shrink by 0.9 per
cent next year, in its worst contraction since 1991, when GDP fell by
1.4 per cent.
The NIESR said that growth will crumble as the last year’s severe
squeeze on households from soaring living costs, weak growth in
incomes, slumping house prices, and a continuing credit drought
trigger a sharp, consumer-led downturn.
Mounting fears over the potential scale of recession in the UK have
also seen the pound plunge against the dollar in recent days as
currency markets delivered a vote of no confidence in Britain’s
prospects after a raft of grim economic news over the past month.
On Tuesday, Mr King said that “over the past month, the economic news
has probably been the worst in such a short period for a very
considerable time”.
Hopes of staving off a recession as deep and protracted as those in
the early Nineties and early Eighties now rest on expectations of
sharp cuts in interest rates by the Bank, and plans by the Chancellor
to bring forward future public spending in his impending Pre-Budget
Report.
The NIESR and City economists have cautioned that these measures are
likely to have only a limited effect and that it is probably now too
late to prevent a potentially sharp recession.
However, Martin Weale, the NIESR's director said last night: "The
trouble is we don't really know how deep it is going to reach ... I
think that the recession we are expecting won't be quite as severe as
the recession that we had in the early Nineties, and that in turn was
not as severe as that in the early 1980s, so that as recessions go, I
am hopeful that it will turn out to be one of Britain's milder
recessions."
======================
FINANCIAL TIMES 24.10.08
Data confirm UK on brink of recession
By Norma Cohen
The UK economy shrank by 0.5 per cent, more sharply than expected in
the three months to September, official data released on Friday
showed – the first official confirmation that the UK is entering a
recession.
It was the first decline in output since 1992 and the biggest single
drop in any quarter since 1990. Weaker service industries,
construction and production output drove the deceleration in growth,
the Office for National Statistics said. Manufacturing made the
single largest contribution to the slowdown, falling 1.0 per cent in
the quarter.
A Reuters poll of economists earlier this week showed an average
forecast of a 0.2 per cent decline in GDP.
The data released on Friday are the “flash estimate” of GDP, a number
notoriously subject to revision. There was a grain of comfort in the
fact that GDP for the second quarter was unrevised and showed zero,
rather than declining, growth.
Technically, a recession is defined by two successive quarters of
declining growth. But economists said that the drop in output was so
sharp that there seems little point in pretending that Britain is not
yet in recession.
Howard Archer, economist at Global Insight, said “The depth of the
decline means that we are there to all intents and purposes. Indeed,
there can be no doubt that further marked GDP contraction will occur
in the fourth quarter as consumers retrench in the face of major
headwinds and investment is pared back sharply.”
(- - - - - - - - -). The motor trades and wholesale distribution
services made the largest contribution to that decline.
The woes of the auto industry have already begun to show as
manufacturers slash production and place workers on short-hours in an
effort to trim the backlog of vehicles.
(- - - - - - - - -) Banking data have shown a fall in lending for new
homes and businesses and last week, Britain reported a 0.5 per cent
rise in unemployment in September to 5.7 per cent, the biggest one-
month rise since 1991.
(- - - - - - - - -)
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Stocks plunge amid fears for global economy
FTSE falls 9% and loses the 4,000-point level
=======================
TELEGRAPH 24.10.08
Sterling and FTSE 100 plunge as official figures show UK recession is
on its way
Sterling plunged seven cents against the dollar and the FTSE tumbled
more than 7pc after official figures confirmed that Britain is on its
way to its first recession since the early 1990s.
By Angela Monaghan
Last Updated: 11:15AM BST
UK gross domestic product fell by 0.5pc, the first contraction since
the second quarter of 1992, and the biggest drop since the fourth
quarter of 1990. Economists had expected a drop of 0.2pc.
"Not only do Q3's GDP figures confirm that the UK has entered a
recession, but the 0.5pc drop is truly shocking," said Vicky Redwood,
UK economist at Capital Economics.
The cocktail of bad news coming from the economy has hammered
sterling and the FTSE 100 this week. The pound was down seven cents
at $1.55 in mid-morning trading and the FTSE tumbled more than 6pc.
London Stock Exchange, HBOS and Barclays lead the fallers after
dramatic declines in Asia.
(- - - - - - - -) Many of the symptoms of a deep slowdown are
already present, including a sharp rise in unemployment, falling
house prices, low wage growth and faltering business confidence.
(- - - - - - - - -)
"For the services sector to shrink for the first time since 1992
marks a turning point in the economic fortunes of the UK," said Hetal
Mehta, senior economic advisor to the Ernst & Young ITEM Club.
(- - - - - - - - -)
The debate among economists has now turned to how severe a recession
in the UK may be. Earlier this week, the National Institute of
Economic and Social Research revised down its forecasts for the UK
and now predicts that the economy will contract by 0.9pc in 2009 -
the first full year recession since 1991.
(- - - - - - - - -).
The pound has been hammered in recent days over fears that the UK
will suffer a longer and deeper recession than other countries, and
over the expectation that the MPC will more aggressively cut rates
than other countries. That is largely because at 4.5pc, interest
rates in this country are high compared with other countries, so the
MPC should have [more ?] room to cut than other central banks.
in recession, even if we have to wait another 3 months to prove it !
The figures are worse than predicted and hopefully will stop the
politicians and the media distracting us all with silly behaviour and
even sillier stories lacking in any substantive facts of a foolish
Tory trusting the most the most untrustworthy man in politics.
There’s a crisis on so stop playing games! (see Jeff Randall which I
will post later)
The basic story is in the BBC report below so I have made a cuts in
other reports to avoid too much duplication.
But first the Tory reaction - - - - -
xxxxxxxxxxxxx cs
===========================
CONSERVATIVE HOME Blog 24.10.08
George Osborne
As GDP figures show Britain's economy contracted by 0.5% in the last
quarter, George Osborne has attacked the government for its role in
current economic difficulties:
"Everyone was expecting a bad figure but this is much worse. It shows
that millions of British families are in for a very difficult time in
the months ahead. Conservatives will do everything to help people cope.
"It is a defining moment in the record of Gordon Brown. The day that
we can all see that the central claims he made over ten years, that
he had abolished boom and bust and therefore didn't need to set aside
money for a rainy day has been shown to be completely false.
“Sadly it will be millions of families, pensioners and companies that
will pay the price for Labour's failure to prepare for this moment."
===========================
BBC ONLINE 24.10.08
Recession looms as economy slows
The economy shrank for the first time in 16 years between July and
September, confirming that the UK is on the brink of recession.
Economic output fell by 0.5%, according to the Office for National
Statistics, amid fears of a global slowdown and huge volatility on
world share markets.
The UK will be classed as being in recession if the economy slows in
the fourth quarter as well.
The credit crisis has forced consumers to tighten their belts.
Shock fall
The fall 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 is the biggest fall in UK gross domestic product (GDP)
since the first quarter of 1990 and is much greater than analysts had
predicted.
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.
Manufacturing output fell 1% while construction tumbled 0.8% compared
to the previous quarter.
Market fear
UK shares tumbled further on the news, down 6% at 3843 points just
after the release of the data.
The pound was also affected, falling to $1.5889 - the first time it
has fallen below $1.60 in the past five years.
"My comment to traders is dive, dive, dive," said Societe Generale's
Brian Hilliard.
"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."
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."
Global slowdown
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.
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.
Correspondents fear that the slowdown may hit the UK harder than
other countries.
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?
Has the growth in personal debt added to the problems?" he said.
=======================
THE TIMES 24.10.08
Bleak growth figures show Britain on brink of recession
Gary Duncan, Economics Editor
Britain’s economy shrank in the three months to September for the
first time in 16 years, all but confirming that it is now in the grip
of its first recession since the early Nineties.
Bleak official GDP figures showing that national income plunged by
0.5 per cent in the three months to the end of September, in the
sharpest drop since the end of 1990, revealed that the toll from the
credit crisis and housing crash has ended Britain’s longest unbroken
run of quarterly growth since at least 1955.
The drop in GDP in the third quarter came after the economy
stagnated, with zero growth, in the previous three months.
Today's worst-than-expected fall in GDP sent the pounds tumbling to a
new five year low of $1.5616 against the dollar while London's FTSE
100 index of leading shares lost 6.3 per cent, or 258.86 points, to
3,828.97.
With output and income across the economy now set to suffer a
further, almost inevitable fall in the present quarter, Britain is
almost certainly already in recession. But formal confirmation of
that will not now come until release of GDP figures for the October
to December period, due early next year.
Both the Prime Minister and Mervyn King, the Governor of the Bank of
England, admitted for the first time earlier this week that the
economy was probably entering a recession.
The detail of yesterday's figures added to the grim picture, showing
every part of the economy except the farming, fishing and forestry
industries is now in decline. Over the past three months,
manufacturing shrank by 1 per cent, output from utilities fell by 1
per cent, construction contracted by 0.8 per cent, and the vast
services sector, which makes up three-quarters of the economy, shrank
by 0.4 per cent.
The threat of a consumer-led recession was emphasised as, within
services, the retail, wholesale, hotels and restaurants sector
slumped by a drastic 1.7 per cent in the third quarter.
Many economists are now warning that the resulting slump in the
economy could be as deep and painful as that suffered in the early
Nineties, rather than merely a “technical recession” with two
quarters of falling GDP.
George Magnus, senior economic adviser at UBS, said last night: "The
early indications of recession from the third quarter I don't think
will be that compelling. But this is only the beginning.
"I think this recession is going to go on for quite a long time,
perhaps through next year, maybe even to the beginning of 2010. And
in that sense, it is going to look quite nasty, compared with the two
recessions that we had at the beginning of the Eighties and the
beginning of the Nineties. "
Sushil Wadhwani, a former member of the Bank of England's Monetary
Policy Committee said
"I think this is a very different situation [from the Eighties and
Nineties}. I think the fourth quarter and the first quarter of next
year we are likely to see a remarkably steep downturn. That is what
history suggests happens when finance to small and medium sized firms
is restricted.
"I think we are going to end up being surprised by the suddenness by
which output drops over the next two quarters. I think the numbers
over the next two quarters are likely to be rather worse than the
consensus is looking at and it could turn out to be quite frightening
in terms of its impact on confidence."
The influential National Institute of Economic and Social Research
(NIESR) predicted this week that the economy will shrink by 0.9 per
cent next year, in its worst contraction since 1991, when GDP fell by
1.4 per cent.
The NIESR said that growth will crumble as the last year’s severe
squeeze on households from soaring living costs, weak growth in
incomes, slumping house prices, and a continuing credit drought
trigger a sharp, consumer-led downturn.
Mounting fears over the potential scale of recession in the UK have
also seen the pound plunge against the dollar in recent days as
currency markets delivered a vote of no confidence in Britain’s
prospects after a raft of grim economic news over the past month.
On Tuesday, Mr King said that “over the past month, the economic news
has probably been the worst in such a short period for a very
considerable time”.
Hopes of staving off a recession as deep and protracted as those in
the early Nineties and early Eighties now rest on expectations of
sharp cuts in interest rates by the Bank, and plans by the Chancellor
to bring forward future public spending in his impending Pre-Budget
Report.
The NIESR and City economists have cautioned that these measures are
likely to have only a limited effect and that it is probably now too
late to prevent a potentially sharp recession.
However, Martin Weale, the NIESR's director said last night: "The
trouble is we don't really know how deep it is going to reach ... I
think that the recession we are expecting won't be quite as severe as
the recession that we had in the early Nineties, and that in turn was
not as severe as that in the early 1980s, so that as recessions go, I
am hopeful that it will turn out to be one of Britain's milder
recessions."
======================
FINANCIAL TIMES 24.10.08
Data confirm UK on brink of recession
By Norma Cohen
The UK economy shrank by 0.5 per cent, more sharply than expected in
the three months to September, official data released on Friday
showed – the first official confirmation that the UK is entering a
recession.
It was the first decline in output since 1992 and the biggest single
drop in any quarter since 1990. Weaker service industries,
construction and production output drove the deceleration in growth,
the Office for National Statistics said. Manufacturing made the
single largest contribution to the slowdown, falling 1.0 per cent in
the quarter.
A Reuters poll of economists earlier this week showed an average
forecast of a 0.2 per cent decline in GDP.
The data released on Friday are the “flash estimate” of GDP, a number
notoriously subject to revision. There was a grain of comfort in the
fact that GDP for the second quarter was unrevised and showed zero,
rather than declining, growth.
Technically, a recession is defined by two successive quarters of
declining growth. But economists said that the drop in output was so
sharp that there seems little point in pretending that Britain is not
yet in recession.
Howard Archer, economist at Global Insight, said “The depth of the
decline means that we are there to all intents and purposes. Indeed,
there can be no doubt that further marked GDP contraction will occur
in the fourth quarter as consumers retrench in the face of major
headwinds and investment is pared back sharply.”
(- - - - - - - - -). The motor trades and wholesale distribution
services made the largest contribution to that decline.
The woes of the auto industry have already begun to show as
manufacturers slash production and place workers on short-hours in an
effort to trim the backlog of vehicles.
(- - - - - - - - -) Banking data have shown a fall in lending for new
homes and businesses and last week, Britain reported a 0.5 per cent
rise in unemployment in September to 5.7 per cent, the biggest one-
month rise since 1991.
(- - - - - - - - -)
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Stocks plunge amid fears for global economy
FTSE falls 9% and loses the 4,000-point level
=======================
TELEGRAPH 24.10.08
Sterling and FTSE 100 plunge as official figures show UK recession is
on its way
Sterling plunged seven cents against the dollar and the FTSE tumbled
more than 7pc after official figures confirmed that Britain is on its
way to its first recession since the early 1990s.
By Angela Monaghan
Last Updated: 11:15AM BST
UK gross domestic product fell by 0.5pc, the first contraction since
the second quarter of 1992, and the biggest drop since the fourth
quarter of 1990. Economists had expected a drop of 0.2pc.
"Not only do Q3's GDP figures confirm that the UK has entered a
recession, but the 0.5pc drop is truly shocking," said Vicky Redwood,
UK economist at Capital Economics.
The cocktail of bad news coming from the economy has hammered
sterling and the FTSE 100 this week. The pound was down seven cents
at $1.55 in mid-morning trading and the FTSE tumbled more than 6pc.
London Stock Exchange, HBOS and Barclays lead the fallers after
dramatic declines in Asia.
(- - - - - - - -) Many of the symptoms of a deep slowdown are
already present, including a sharp rise in unemployment, falling
house prices, low wage growth and faltering business confidence.
(- - - - - - - - -)
"For the services sector to shrink for the first time since 1992
marks a turning point in the economic fortunes of the UK," said Hetal
Mehta, senior economic advisor to the Ernst & Young ITEM Club.
(- - - - - - - - -)
The debate among economists has now turned to how severe a recession
in the UK may be. Earlier this week, the National Institute of
Economic and Social Research revised down its forecasts for the UK
and now predicts that the economy will contract by 0.9pc in 2009 -
the first full year recession since 1991.
(- - - - - - - - -).
The pound has been hammered in recent days over fears that the UK
will suffer a longer and deeper recession than other countries, and
over the expectation that the MPC will more aggressively cut rates
than other countries. That is largely because at 4.5pc, interest
rates in this country are high compared with other countries, so the
MPC should have [more ?] room to cut than other central banks.
Posts
