Monday, 8 June 2009

Financial Times: 'recession is over' (for now)

Amidst the political gloom, an unexpected glimmer of economic light in the Financial Times this morning.

The report of City opinion - Economists see pause in recession - suggests (against almost all political/media commentary to date) that the Chancellor's budget growth forecast "may have been too pessimistic",

The recession is over for now, the majority of City economists polled by the Financial Times believe.

In a survey conducted at the end of last week, 11 out of 20 economists said the economy had stopped contracting in June and was likely to start growing in coming months. The majority of those believing the economy was still shrinking thought the bottom of the downturn was near.

The survey suggests the government’s forecast in the Budget that growth would return only by the fourth quarter of this year may have been too pessimistic.

Alan Clarke of BNP Paribas told the FT: “The outlook for gross domestic product over the remainder of the year has improved dramatically . . . the recession is over.”

Equally, a pick-up in manufacturing will give a quick boost to growth. But the question remains how sustainable that will be.

“Growth is likely to remain below potential for some time. In turn, this points to ongoing increases in unemployment,” said Mr Clarke. “Things will still feel awful for a long time.”

I don't have the technical expertise to comment on the accuracy of the predictions, but it is a serious survey based on key indicators. Perhaps more surprising still is an uptick in consumer confidence.

In last week’s Nationwide consumer confidence indicator, as many respondents thought the economic situation in six months’ time would be better than today as believed the outlook would be worse. As recently as March, the same survey showed twice as many respondents gloomy about the UK’s economic prospects than those who were optimistic.

(Hat tip: New Culture Secretary Ben Bradshaw (on Facebook) - "Ben Bradshaw notes today's Financial Times says the recession is over - a story completely ignored of course by the BBC". I might or might not have got to the FT eventually but not - this morning - by 7am.

1 comment:

Angst Corner said...

This sure is some reassuring news amidst all the recession gloom.
Incidentally there is an interesting website that is specifically dedicated to recession victims.It offers help and discusses all issues related to recession- It’s worth a visit!