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Thursday 17th of September 2009
May 6, 2009    

NIESR predicting worst recession since 1930s

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by Kay Murchie

The National Institute of Economic and Social Research (NIESR), an economic thinktank, is forecasting that the UK economy will contract by 4.3% this year, then grow by 0.9% in 2010.

According to the NIESR, the current recession in the UK could be the worst since the early 1930s with “a real possibility that GDP could fall more this year than in 1931.”

In other forecasts, the UK Government said the economy will contract by 3.5% in 2009 then grow by 1.25% next year.

Meanwhile, in its latest economic forecast, the International Monetary Fund said that the UK economy will contract by 4.1% this year and then experience a further fall of 0.4% in 2010.

In its report the NIESR says: “The pace of decline to date shows a remarkable resemblance to that of the depression of the early 1930s, though that similarity should be broken as a feeble recovery gets under way in the final quarter of this year.”

In the meantime, the NIESR said Britain’s public debt could rise to 94.5% of GDP in five years time - far exceeding the Chancellor’s forecast of 76.2%.

However, on a positive note, the Nationwide Building Society said last month that UK consumer confidence experienced its biggest rise since May 2007. The consumer confidence index increased to 50 last month, up from 42 the previous month.

Commenting on the index, senior economist Martin Gahbauer said: “In recent weeks, we have seen a strong rebound in global equity markets and some tentative signs of improvement in housing market indicators, both of which may have contributed to the marked upturn in consumer confidence during April.”

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1 Comment »

  1. NIESR seem to be around 6 months behind everyone else.

    Comment by Phillip — May 6, 2009 @ 8:36 am

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