A Likely End to Britain’s Double-Dip Recession
Latest macroeconomic data suggests that Britain might finally emerge from the longest double-dip recession since the Second World War.
**GDP Expected to Rise in the Third Quarter of 2012**
According to analysts, the UK will achieve a 0.6 percent rise in GDP between July and September after seeing its output decline over the previous three quarters. The increase in GDP would likely come as a result of temporary effects such as London hosting the Olympics and the recovery from the extra jubilee bank holiday in June. Vicky Redwood from Capital Economics told The Guardian that these factors would add at least 0.7 percent to third-quarter GDP. “GDP will therefore need to have risen by more than that to point to any recovery in underlying output. Anything less should be viewed as disappointing.” she added.
The data on output growth is expected to come out on Thursday and if positive it would provide a much-needed popularity-boost for George Osborne’s plan to reduce the deficit and strengthen the chancellor’s resolve to stick to his “plan A” budget cutting measures.
The GDP figure is also expected to influence the monetary policy committee’s decision on whether to continue with the £375 billion quantitative easing programme next month. “Last week’s MPC minutes showed a clear difference of opinion on the committee. A weak GDP figure could tip any wavering members to voting for more QE.” opined Ms Redwood as quoted by The Guardian.
**Lower Unemployment Figures**
According to the Office for National Statistics total employment in the UK has risen by 1.75 percent or 510,000 jobs in the past year to 29.59 million. The increase outpaced the 1.37 percent gain registered in the US for the same period.
!m[Falling Unemployment and Increases in GDP Growth Strengthen Government’s Resolve to Stick with Austerity](/uploads/story/612/thumbs/pic1_inline.png)The Minister for Employment Mark Hoban said that despite the tough economic times, the private sector continues to create jobs and the welfare reforms encourage British citizens to return to work. “The big fall in youth unemployment is particularly welcome, but we know this remains a challenge, which is why we have the £1 billion Youth Contract offering nearly 500,000 work experience places, apprenticeships and wage incentives to help young people get a job.” Mr Hoban said.
Analysts and the Bank of England alike are puzzled by the fact that an economy in recession is creating jobs. Possible explanations include the rise in self-employment and part-time work – data shows that 1.4 million people are working part-time but would like to have a full-time job.
Recent surveys indicate firms are planning to hire more workers in the coming months despite the uncertain economic outlook. The government is hopeful this will help offset the job cuts in the public sector, which are part of the tough austerity programme.
**Brits Against Austerity**
On Saturday 20 October tens of thousands of protesters marched through London calling for an end to public spending cuts and tax rises. Cleaners, nurses, ambulance drivers and librarians were among those who joined the march in Hyde Park, which turned into one of the biggest anti-austerity protests this year. Demonstrators carried signs saying “Tax the Rich, Teach the Poor”, “No Cuts” and “Plebs of the World Unite”, poking fun at Andrew Mitchell’s resignation. The Tory MP quit as the government chief whip after allegedly swearing at police officers and calling them “plebs”.
According to Reuters, the coalition government has managed to impose austerity measures and at the same time respond to calls from unions and the opposition to do more to increase growth by relaxing planning laws and boosting lending to businesses.
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