UK's Worst-Ever Recession Is Set To Finish!

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(Free-Press-Release.com) January 27, 2010 -- Economists predict that the fourth-quarter GDP data will show the economy is growing for the first time since Britain entered the recession in the second quarter of 2008.

"I would be astounded if the UK did not grow in the fourth quarter of 2009 and would have to seriously consider giving up economic analysis and forecasting," said Howard Archer, chief UK economist at IHS Global Insight.

Britain is the last of the G7 nations to remain in recession and took many by surprise at the end of last year, when third-quarter results showed output was still shrinking.

Analysts predict that the latest GDP data will show the economy grew 0.4% from October to December, up from a 0.2% contraction.

While an official end to the recession seems probable, a strong recovery looks less certain.

Speaking to Sky News, the Business Secretary Lord Mandelson warned that businesses face a lengthy struggle after taking drastic steps during the recession.

"They've had to cut costs, which might actually strengthen them in the long term, but in the meantime it is tough medicine for some people," he said.

"We're going to have to continue to be careful during the course of this year.

"If we were to suddenly take a lurch in what the Government is doing in its spending or its investment and we were to knock away the support for the economy, then we would risk a double-dip recession.

"That would be a disaster for the recovery."

The IMF and the United Nations have also warned of a possible double-dip recession this year, while public borrowing stands at an all-time high.

"It's definitely worth pointing out that, even if we do exit recession, the hard work will only just be beginning," said Colin Ellis, an economist at Daiwa Capital Markets Europe.

"Shrinking the massive budget deficit, getting private sector employment growing and generating genuine wage growth will be big challenges over the next few years."

Chancellor Alistair Darling has admitted Britain's recession would prove to be deeper than thought, with the economy predicted to have shrunk 4.75% in 2009 compared with a previous official estimate of 3.5%.

The nation's output would go on to grow by a modest 1.0-1.5% in 2010, Mr Darling added, matching his previous forecast.

While Britain battled growing unemployment sparked by the financial crisis, the economy contracted for six quarters in a row - its longest recession since records began in 1955.

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