One North East boss says we can survive recession

Jan 23 2009 By Adrian Pearson

THE UK is officially in recession with the economy at its worst since 1980.

Official figures for the last three months of 2008 show the economy shrank by 1.5% - worse than the declines seen in the recession of the early 1990s and the biggest fall in more than 28 years, according to the Office for National Statistics.

The figures will not have taken into account the January job losses across the North East.

Since the turn of the year, Newcastle Productions, which runs the Findus Foods factory in Longbenton, put 360 jobs on the line by calling in administrators. Elsewhere car giant Nissan, in Washington, revealed it was axing 1,200 jobs. Newcastle Building Society is also cutting 150 staff.

Development boss Alan Clarke, One North East chief executive, said the private and public sector would be working together to hep the region through the downturn.

He said: “While today’s announcement that we are in recession is not unexpected, it is bad news nonetheless.

“This year will present the North East economy with significant challenges. But the breadth and diversity of our business base means that we are better placed than in previous economic downturns to emerge from this situation in better shape to take advantage of the opportunities that will return.”

Today’s estimated fall in quarter-on-quarter gross domestic product (GDP) comes after a 0.6% decline in the previous three months - a ``technical“ recession, as defined by two successive quarters of negative output.

Graeme Leach, chief economist at the Institute of Directors, said: ``The UK economy is heading for a long cold winter which is unlikely to end before spring 2010.

``The GDP figures displayed doom and gloom across the board, with every sector barring agriculture contracting in the fourth quarter.

The biggest sector fall was in manufacturing and so even the weak pound couldn’t bring good news for manufacturers.

``The latest recession is beginning to look as if it will be more like the 1980s than the 1990s in terms of lost output.”

Total production, which includes manufacturing and accounts for 18% of the economy, plunged by 3.9% in the last three months of last year in the lowest reading since the second quarter of 1980.

There are fears that the recession will be deep and prolonged, with Bank of England governor Mervyn King warning earlier this week that the recession was tightening its grip.

He said the economy was expected to continue contracting into the first half of the year with ``further marked falls in output“.

Experts fear that 2009 will be far worse than 2008, with predictions that the economy could shrink by 2% or even 3% in what could be the biggest decline since the Second World War.