City taken by surprise as Bank of England’s figures herald end of recession

Really2

Britain has emerged from the worst recession since the Second World War, new Bank of England figures suggested yesterday (see Commentary, facing page).

Detailed forecasts published by the Bank showed that gross domestic product (GDP) will rise by 0.2 per cent between July and September, marking the first economic expansion since the first three months of last year. The Bank expects the economy to continue to expand in the fourth quarter, by 0.4 per cent, and sustain the recovery throughout next year.

These growth figures have been extrapolated by economists from data published by the Bank in the wake of last week’s Inflation Report. The Bank expects the economy to grow by 2.2 per cent next year, its central forecast shows. That is greater than the Treasury’s forecast of 1.75 per cent, which is seen as extremely optimistic by City analysts, who expect the economy to grow by only 0.8 per cent.
http://business.timesonline.co.uk/tol/business/economics/article6802722.ece

Green shoots anyone?:D (and yes before anyone says it unemployment will still be growing after the recession is over)

purch

It doesn't sit at all with the actual Inflation Report and the comments made by Mervyn King at the time.

He said any recovery "would be very fragile at best" , and that the risks were 'on the downside'...and that 'it would take many years for growth to return to anything like the levels seen before the recession started'.........which is clearly at odds with the 'extrapolated' numbers cooked up by these economists.

Thrugelmir

Not sure about the headline though. As this would be a major contributory influence.

The upbeat forecasts take into account last week’s surprise £50 billion boost to the economy

To the man in the street coming out of recession, unfortunately, will mean little though.

When Government expenditure is cut and QE finishes. Will there be sufficent momentum to grow the economy?

Really2

Surely small growth is better than falling GDP?

Graham_Devon

It may be right it may be wrong.

What is strange though is why Merv said after the last meeting the recession was more severe than first thought hence we need 50bn pumped in.

It's getting more and more difficult to filter through stuff to get to the truth. What is it? The deepest recession since the 30's? Or a recession that we slipped into and got out of pretty quick? Or a fair money based recovery?

Really2

Graham_Devon wrote: »

It may be right it may be wrong.

What is strange though is why Merv said after the last meeting the recession was more severe than first thought hence we need 50bn pumped in.

I think that is a reaction to what had happened and to maintain some growth so we do not slip back in to recession.

I don't think the 2.2% figure is right but, starting to see growth is good.

Jonbvn

I think the BOE may have lost the plot. First it's Armageddon, now everything is fine almost in the same week!

Could be spin???

bendix

Perhaps there is no 'truth' Graham. We've never been in a situation like this, so there is nothing to compare it too. In the 1930s the world was simple - today there is so much data around, globalisation, computerisation and other influences which often override the economic fundamentals.

People talk about unemployment rising, but that seems to ignore the fact that vast numbers of people are STILL working and doing quite well with lower prices, low interest rates etc and - of course - some indicators suggesting property prices have bottomed and share prices have rallied. After 9 months of feeling very insecure, those people in jobs will likely start feeling more confident and will be shopping again.

Often it is this sentiment change which drives the economy, rather than the other way around.

Really2

Graham_Devon wrote: »

What is it? The deepest recession since the 30's?

It is, but you were never going to feel it like the people in the 30's. It is just a case of in terms of GDP.

We were never going to suffer like the 30's, like some on here would have had you believe last year.

Really2

bendix wrote: »

Perhaps there is no 'truth' Graham. We've never been in a situation like this, so there is nothing to compare it too. In the 1930s the world was simple - today there is so much data around, globalisation, computerisation and other influences which often override the economic fundamentals.

People talk about unemployment rising, but that seems to ignore the fact that vast numbers of people are STILL working and doing quite well with lower prices, low interest rates etc and - of course - some indicators suggesting property prices have bottomed and share prices have rallied. After 9 months of feeling very insecure, those people in jobs will likely start feeling more confident and will be shopping again.

Often it is this sentiment change which drives the economy, rather than the other way around.

Good post.:T

Graham_Devon

Really2 wrote: »

I think that is a reaction to what had happened and to maintain some growth so we do not slip back in to recession.

I don't think the 2.2% figure is right but, starting to see growth is good.

I don't know whether to agree or disagree with you really on the "starting to see growth is good" part.

I would personally like to see growth. But, when I say growth, I mean real growth, not this "quick, bung another 50bn into the economy to FORCE growth".

Feel free to explain to me your feelings on this, and why this kind of growth is a good thing, as on this subject, I'm open to thoughts!