NIESR: Worst slump for 90 years is over

BRITAIN’S fragile economy finally started to grow in the last three months of 2009, after suffering its worst year for almost 90 years, a leading think-tank said yesterday.

The National Institute for Economic and Social Research (NIESR) forecast modest quarterly growth of 0.3 per cent for the fourth quarter of last year, putting the annual fall at 4.8 per cent, the worst since 1921 and bigger than any yearly contraction during the Great Depression.

Official data will be released by the Office for National Statistics on 26 January.

However, the think-tank noted that output fell sharply for twelve months until March and has not changed much since then, although evidence of recovery is starting to emerge.

Britain will be the last major economy to exit recession, lagging countries such as France and Germany, which returned to growth in the second quarter of last year.

Opposition politicians reacted angrily to the UK’s dire 2009. Shadow chief secretary to the Treasury, Philip Hammond, said: “We were the first major economy to enter recession and will be the last out. We have had the biggest contraction since 1921 and we need to get Britain back on her feet. We can’t go on like this.”

However, despite a large financial sector and mountains of consumer debt, Britain was not alone in experiencing a dire 2009.

Official data published yesterday showed that Germany’s economy shrank by five per cent. The world’s number one exporter suffered as its large manufacturing sector was hit by consumers cutting back on spending and a drying up of world trade.

In a brief statement, the Treasury said the NIESR estimate supported chancellor Alistair Darling’s view that economic growth returned in the fourth quarter. “But the outlook remains uncertain, so government must continue to support businesses and families until the recovery is assured,” Liam Byrne, chief secretary to the Treasury, said. “We also need to live within our means, which is why we have set out plans to halve the [budget] deficit in the next four years, while protecting frontline services.”