Recession history
History of previous uk recessions
How does this recession compare to others since 1945
Compare recessions
Britain has now endured eight recessions since the Second World War. The early ones in the late 1950s and early 1960s were both short-lived and relatively shallow
Then, in the early to mid-1970s, an oil price shock helped cause larger contractions in output and a surge in inflation – so called "stagflation". If there were any decade over the past fifty years we'd rather forget, then this would be it.
The recession at the start of the 1980s was by far the worst in recent memory – not only did it last for more than a year, but economic output contracted by nearly 5pc - quiet a turnaround from the 4pc expansion before the Winter of Discontent took its toll.
Prior to the present episode, the last time that output fell in the UK was in 1990 to 1991. Just like the recession ten years before, output fell for just over a year. But the drop was not as sharp as it was in the early 1980s – we saw a fall of 2.5pc.
In the 1980s and 1990s recessions, unemployment rose sharply – by close to two million people during the former, and around one million people in the latter. These increases eclipsed those in the 1970s. This was probably because back then powerful unions and legislation made it more difficult to get rid of workers when output collapsed.
Also, in the 1970s there were fewer consecutive falls in output – possibly making firms think that the recession would be mild, and that they could get away with making fewer redundancies.
This time round, unemployment is set to rise sharply. Not only is the recession likely to be prolonged and deep, but past liberalisation of the labour market makes it easier for firms to get rid of their staff when times get hard.
The number of people out of work currently stands at almost two million. Given the rate at which the economy is deteriorating this could easily be above three million in a year's time.
No two recessions are alike, and that applies to the current slowdown also. It has been caused by a shock to the availability of credit, a massive build up of debt (which needs to be unwound) – and crucially is occurring across the entire globe.
This could make the scale of the fall in output particularly large, taking unemployment up to worryingly high levels. The government and the Bank of England have their work cut out to provide enough stimulus to prevent deflation and depression, but not too much that it eventually causes excessive inflation once the recession is over.
Recessions: How they rank
1956:
Second quarter: -0.3pc, third quarter: -0.2pc
1957:
Second quarter: -0.1pc, third quarter: -0.7pc
1961:
Third quarter: -0.2pc, fourth quarter: -0.6pc
1973 and 1974:
Third quarter: -0.8pc, fourth quarter: -0.2pc. First quarter 1974: -2.4pc
1975:
Second quarter: -0.7pc, third quarter: -0.2pc
1980 and 1981:
First quarter: -0.8pc, second quarter: -1.8pc, third quarter: -0.3pc, fourth quarter: -1.2pc. 1981: first quarter: -0.5pc
1990 and 1991:
Third quarter: -1.2pc, fourth quarter: -0.6pc. 1991: first quarter: -0.1pc, second quarter: -0.3pc, third quarter: -0.4pc.
Categories: Recession history Tags: compare recession
UK economy in deep recession
UK Economy
The head of the Bank of England Mervyn King, speaking to reporters today did not deny the obvious and literal at once - after greeting - moved to the bad news. However, Mervyn King, acknowledged the need to mitigate further easing of monetary policy and reducing rates. The Bank of England stands ready to increase the offer of money in the economy and stimulate lending to the real economy.
Nothing new, Mr. King did not say. A recession in Britain say a long time, but the head of the Central Bank launched the country where the pessimistic forecast of government payments on the duration of a recession. Mervyn King seems to have decided that now is not the time for vain hopes and acknowledged - the decline in the economy will be quite long: "Monetary, fiscal and financial policies are changing rapidly in terms of recession. But the duration and depth of the recession will depend to a significant degree of developments in the rest of the world where the economic downturn only worsens. As in the UK and the magnitude of the decline in the world is determined by two factors - the further deterioration in credit sector after the collapse of the international banking system, and the collapse of confidence, which leads to a drop in spending and production. Recovering This confidence will not be easy and will take time. "
The drop in UK GDP by mid-2009 could range from 4% to 6% compared to 2008, predicts Bank of England. The United Kingdom economy has officially entered the recession period, showing negative momentum of GDP in the third and fourth quarters of 2008. On the GDP growth is not expected until 2010. Managing Director of Arbat - Capital Management Alexander Orlov believes that in general the real prediction: "In England, I think the recession will be shorter than in continental Europe, after the pound dropped to 10-15 percent, it makes sense to buy the pound against the euro . first entered recession in the United States, then British, then Continental Europe and will go in the same way. The Bank of England stands ready to increase the money supply so as to quantitative easing - that the Fed is already practicing. "
According to the Central Bank of UK inflation in the country by the end of the biennium may be below the current strip targeting at 2%. Now the figure is annualized 3.1% and will fall. And that, according to chief economist at IFC Opening Danila Levchenko, a negative factor because of the economic threat of deflation. Here's what he told Business FM: "Inflation in the UK in the period from September to December fell heavily, the peak was in September, to the person a clear and rapid decline in inflation. Of course inflation has fallen, too, because of falling energy prices, as well as because of the British Government's decision to reduce the VAT rate from 17.5 to 15 percent. So I think that inflation will soon fall below 2 percent, it is quite likely. "
As predicted by experts, Mervyn King, confirmed the intention to further reduce the discount rate - to 75 hundredths per cent by the middle of this year. This should give the money economy and encourage lending. Plus, soon to be implemented on buy-back program of problem assets from banks.
Categories: Recession history Tags: uk economy
1991 recession
Britain has officially plunged into recession for the first time since 1991. But while there are many differences today, some things haven't changed much at all ...
Recent comments from the business minister, Baroness Shriti Vadera, referring to some "green shoots" in the economy immediately drew comparisons with Norman Lamont's "green shoots" blunder in October 1991.
The recession was officially declared in January 1991, after starting in the third and fourth quarters of 1990 – two consecutive quarters of contraction – mirroring the pattern this time round.
Unemployment has also followed a similar pattern. It started rising in February 2008 and is now close to 2 million. During the 1990s slump, unemployment first rose in April 1990 after falling for the previous 44 months, and went on rising for three years. Then, inflation was in double digits and interest rates had risen as high as 15%
From the guardian
Categories: Recession history Tags: 1991, recession