UK limps out of recession

Jan 27 2010 By Karen Dent and Kelly Macnamara, The Journal

THE UNITED Kingdom's fragile economy stumbled out of recession yesterday, but its weak performance fuelled fresh fears of a further slump.

The tentative 0.1% growth in the final quarter of 2009 ended Britain’s longest and deepest decline on record, said the Office for National Statistics.

But it fell far short of expert forecasts of a 0.4% rise and prompted a political storm as Chancellor Alistair Darling defended his growth predictions for the year, while opposition parties questioned his handling of the economy.

Last year, output slumped 4.8%, the biggest annual drop since 1949. The economy has contracted 6% since the recession began in quarter two of 2008.

The UK is the last of the G7 nations to technically pull out of decline, although the fragile nature of the recovery will heighten fears of a "double-dip" recession with spending cuts and tax hikes looming after the next general election. The figures coincided with fresh forecasts from the International Monetary Fund, predicting the UK will expand 1.3% this year, compared with 2.7% in the US, 1.5% in Germany and 1.4% in France.

Economists had hoped for a stronger upturn after survey data had pointed to an increase for both manufacturing and services firms, and unemployment fell for the first time in 18 months.

However, the services sector, which accounts for more than two-thirds of the economy, only managed 0.1% growth in the fourth quarter.