UK finally crawls out of recession

The Bank of England

The British economy has become the last major economy to exit recession after yielding a mere 0.1 percent growth in the last three months of 2009.

In comparison, Europe's two biggest economies - Germany and France - came out of recession last summer while Japan and the US also emerged later in the year. Meanwhile the UK's economy has contracted for six consecutive quarters - the longest period since quarterly figures were first recorded in 1955.

With UK unemployment falling for the first time in 18 months and the government car scrappage scheme giving a lift to the economy, the UK slowly but surely saw its production and service sectors grow, even if it was by 0.1 percent.

Not all good news

Despite this literal little lift, things aren't quite looking up for the UK yet. The Office for National Statistics (ONS) reported that the country's GDP fell by a record 4.8 percent last year and that during the 18 months (six quarters) of recession, public borrowing had increased to an estimated £178 billion, while output slumped by 6 percent.

Speaking to the BBC, John Wright, chairman of the Federation of Small Businesses, said that the recovery remained "frail".

"In order to strengthen the recovery it is important that we boost consumer confidence and demand and that interest rates are held steady as continued investment in the economy will be the key to ensuring a sustainable recovery," he said.

This lower-than-expected growth has led many to fear that the economy could be prone to a 'double dip' recession. While the recovery has been attributed and driven by the distribution, hotels and restaurants sectors, with manufacturing rebooting itself, government and other services were also credited with aiding the growth. It was, however, reported that there was a small decrease in business services and finance in the quarter

For the remainder of the year, the World Economic Outlook has predicted a 1.3 percent growth in UK output, rising to 2.7 in 2011. Meanwhile, the economy is expected to grow 2.7 percent but drop by 0.3 percent next year.

Graph from The Office for National Statistics (ONS)

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