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Sunday 20th of December 2009
October 23, 2009    

UK economy fails to emerge from recession in Q3

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by Kay Murchie

The Office for National Statistics (ONS) has today unveiled some disappointing news after it has emerged that the UK economy shrank by 0.4% in the July to September period, meaning the country is still in recession.

However, it must be noted that today’s figures could still be revised up or down at a later date, since the 0.4% figure is the first estimate.

The fall in GDP means it is the first time the UK has endured six consecutive quarters without growth - the first time since the ONS began gathering the data in 1955.

Analysts were hopeful that the there would be growth of between zero and 0.2% since there were signs of stabilisation within Britain‘s services sector. Furthermore, the manufacturing sector has strengthened after many declines.

Today’s news will come as a surprise to many after other major economies such as Japan, Germany, France and Hong Kong all exited recession in the second quarter after experiencing positive growth.

In a bid to boost the UK economy and drag it out of recession, the Bank of England embarked on aggressive interest rate cuts and injected funds into the economy via its quantitative easing programme.

Quantitative easing is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital.

However, today’s worse-than-expected GDP figures are likely to make the central bank consider extending its programme.

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