Will this UK recession be as bad as last time? By Lloyds TSB

The first decline in UK gdp since 1992 means that the economy is heading for recession. Growth contracted by 0.5% in Q3, after being flat in Q2. On balance, it is likely that growth will fall again in Q4 though not by as much as in Q3, which saw a bigger fall than expected as manufacturing output dropped across the board.

UK economy contracts for the first time since 1992

The first decline in UK gdp since 1992 means that the economy is heading for recession. Growth contracted by 0.5% in Q3, after being flat in Q2. On balance, it is likely that growth will fall again in Q4 though not by as much as in Q3, which saw a bigger fall than expected as manufacturing output dropped across the board. The global and UK economic backdrop has worsened significantly in the last 3 months, with the capital injections, government guarantees and cuts in official interest rates doing little to calm financial markets, though some of the panic in equity markets seems to have abated. Such has been the loss of confidence in financial markets that all global leveraged positions are suspect, for countries, firms or industrial sectors. UK growth in Q3 was especially hit hard by the sharp rise in price inflation, weakening in wage inflation and the increases in petrol, gas and electricity charges that cut real household incomes quite sharply.


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