24 Jul 2009
By Edmund Conway
Telegraph
Economic output shrank by 5.6pc in the 12 months to the middle of the year, according to official figures which shattered hopes that the recovery has already begun.
The Office for National Statistics said that Britain's gross domestic product (GDP) contracted by 0.8pc in the second quarter, following the unprecedented 2.4pc fall in the first three months of the year. Economists had expected GDP – the broadest measure of the country's economic performance – to shrink by 0.3pc.
According to calculations by Martin Weale of the National Institute for Economic and Social Research the profile of the current recession is now almost identical to the decline in Britain's output between 1929 and 1931. The 5.6pc contraction over the past year almost matches the 5.8pc fall in the year preceding the second quarter of 1931, during which Credit Anstalt in Austria collapsed, triggering a second wave of economic seizure across Europe.
The recession is far deeper and more severe than those of the early 1980s and 1990s, Mr Weale added.
[...]
Michael Saunders, UK economist at Citigroup, said although he expects growth to return in the third quarter, the recovery will feel subdued.
"As well as a deep recession, we expect a slow recovery, held back by high private debts and (with inadequate bank capital) poor credit availability," he said, adding that it would take until 2013 for the economy to reach the pre-recession peaks of 2008.
He added: "It will be many years before the UK returns to a well-balanced and sustainable mix of low unemployment, low fiscal deficit and low public debts, decent economic growth and low inflation."
[...]
And with the real unemployment rate at around 20%, we're approaching the Great Depression numbers (~25%) in that area as well.
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