According to the CBI headline and press release, the worst of the recession may be past. “The UK recession deepened more than expected in the first three months of this year, but this should prove to have been the worst of the quarterly falls in GDP”.
Yet according to the detail of the forecast, GDP contracted by -4% in the first quarter and is expected to contract by -4.7% in the second quarter. The worst of the recession is not past. The worst of the recession is upon us. The economy is deteriorating further and the second quarter should prove to be the worst of the quarterly falls this year according to the detail.
The recession is expected to moderate in the second half of 2009, the CBI said but Q3 GDP will fall by 4.2% compared to 4% at the start of the year slowing to a fall of -2.8% in the final quarter of the year. There will be no recovery until the second half of 2010, unemployment will continue to rise until then peaking at 3.25 million. GDP will fall by 3.9% this year and rise by just 0.1% in 2010. Government borrowing will hit £157 billion this year and £172 billion next.
As forecasts go, this is a pretty fair scenario but the sub-ed headline suggests green shoots where none exist. When the CBI say the worst of the recession is past, it may be shortly but not for the additional million expected to lose their jobs.
CBI – Forecast The Confederation of British Industry is the premier lobbying organisation for UK business on national and international issues.
Sign up and "subscribe" for e-mail updates or follow Twitter @jkaonline
Economic news and analysis : no politics, no dogma, no polemics, just facts.