UK economic data show worst contraction on record
by ilene - July 24th, 2009 12:13 pm
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UK economic data show worst contraction on record
Courtesy of Edward Harrison at Credit Writedowns
In the just finished second quarter of 2009, the UK economy was contracting a massive 5.6% from the year ago period. This is the worst performance since records began in 1955. What’s more, the data surprised to the downside, with the quarter-on-quarter contraction coming in at 0.8%, much worse than the 0.3% contraction which had been expected. Yet, somehow markets are shrugging this data off and the FTSE is up for the day.
The Telegraph has some wonderful graphs in a slideshow attached to their article on the story. See their story here. It shows that the depths of recession in the UK are behind us at this point, as the economy shrank at a much faster 2.4% in Q1. Nevertheless, the data in the graphs should leave no doubt that the UK is still in recession despite some speculation that it had left recession late last quarter.
The Guardian reported the data this way:
Britain’s economy contracted by a record 5.6% over the past year as output fell for a fifth straight quarter, the government revealed today.
Dashing hopes that the steepest decline in growth since the 1930s might be nearing an end, the Office for National Statistics said gross domestic product fell by 0.8% in the three months to June.
The size of the drop surprised the City, which had expected only a 0.3% decline following recent signs of a pickup in the housing market and strong growth in high street spending.
Sterling dropped sharply after the data, losing a cent against both the dollar and euro to $1.6450 and €1.1577. Mark O’Sullivan, director of dealing at Currencies Direct, said the poor figures had sparked a sell-off of sterling and it is likely to remain under pressure: "The political uncertainty in the UK until the next general election remains a real worry for investors. Many will stay away, particularly with the Conservatives keeping their policies so close to their chest. This could mean further bad news for sterling."
Shares, enjoying their tenth successive day of gains, appeared to shrug off the news, however. The FTSE 100 was up almost 30 points at 11am, at 4589.28.
Describing the figures as "shockingly bad" Vicky