GDP down as UK economy faces a double dip
Date: Tuesday 25th January, 2011
Author: Chris Laughton
Profile: Chris Laughton
The latest GDP figures released this morning by the Office of National Statistics show a contraction of the UK's economy for the last quarter of 2010 by 0.5%.This is despite forecasters expecting growth of between 0.2%-0.6%. More than three years after the collapse of Lehman Brothers and the demise of Northern Rock could the UK be about to enter the previously much predicted 'double dip' recession?
With many businesses stretched to the limit and relying on a strong Christmas to improve cashflow, the contraction of the ecomony may be one more nail in the recovery's coffin. These figures follow yesterday's story that the much anticipated Small Business Loans Deal, which had been brokered between the coalition government and the UK's biggest banks, has stalled.
Restricted access to borrowing, a poor Christmas trading period, a reduction in public sector spending and an increasingly wary general public, mean that the plight of the UK's small businesses continues to be of great concern. It therefore remains paramount that owners, directors and management continue to monitor their cashflow, maintain communication with lenders and seek professional advice as soon as a problem arises in order to maximise their chances of continuing to trade successfully.
Keywords: GDP economy Lehman cashflow "double dip" "small business"
Please note that the opinions expressed in this blog represent the views of the author and not the views of Mercer & Hole.
Discussion and Comments
By George E. Bourguignon, Jr. on Sunday 30th January, 2011
The housing crisis in the US will continue and has the ability to bring the US economy down with it. Watch housing and unemployment (and bankruptcy filings), those the the important figures.
By Robert Moore on Wednesday 16th February, 2011
The real test will come when we can compare the second quarter against the first quarter of this year. Inflation, bank lending, tax rises and possible interest rate rises will all have their part to play.
By Chris Laughton on Wednesday 16th February, 2011
4% CPI inflation and staying there (according to the Bank of England Governor today) and the markets pricing in interest rate rises in May/June suggest that 2011 will not be an easy year.
There are now headlines about banks’ commitments to small business lending, but it will be some while before that lending feeds through, if indeed net lending does increase.
My main point - be wary - continues to apply.