UK not yet in official recession as GDP revised down
23-12-2008
Fears that GDP would be revised downwards to put the UK in official recession were not realised today.
Revisions to existing GDP figures from the Office for National Statistics (ONS) show zero per cent growth was still recorded in the second quarter of 2008, while growth in the third quarter was revised downwards from a fall of 0.5 per cent to a decline of 0.6 per cent.
A further decline is expected for the final quarter of the year which would put the UK officially into recession, defined as two consecutive quarters of falling economic growth.
Jonathan Loynes, chief European economist at Capital Economics, now predicts a one per cent cut in GDP for the final quarter of 2008.
"With GDP shaping up to fall by as much as one per cent or more in Q4 - providing a very weak platform for next year - we now expect the economy to contract by around 2.5 per cent in 2009," he said.
He added the saving ratio for households was also growing - as families batten down the hatches in the face of the economic storm - which was depressing spending levels further.
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