Growth, but not as we know it
On a positive note, the CBI is predicting growth in 2010. But, with unemployment still expected to continue to rise until Q2, we take a look at the latest economic news.
Recession – are we in or out?
Recent news that the contraction in the UK economy was 0.6%, rather than the predicted 0.7%, lifted the mood of economists. This silver lining is welcomed after five consecutive quarters of negative growth, and prompted the Confederation of British Industry (CBI) to predict something of a change for the UK economy – a return to growth.
Their estimates are modest - 0.4% growth for the final quarter of this year, with similar modest upward movements at the start of 2010. This can be seen as encouraging after over a year in recession, especially when you consider the UK economy is down 5.5% from its pre-crisis days.
Further news from the Office of National Statistics (ONS) this month also helped shed a little light on one of the factors that may be inhibiting more energetic growth rates; they found that household savings rates have risen to 5.6% of their income – the highest rate for nearly six years. So, at a time when spending could drive increasing expansion, consumers are saving in response to the nasty shock of economic turmoil.
This, in turn, is likely to take its toll on the jobs market, which hit a 14-year high of 2.47 million unemployed in July. Most analysts agree that this figure is likely to continue to rise, with the British Chamber of Commerce predicting a peak of over 3 million unemployed around mid-2010.
It all adds up to a sense of cautious optimism – we appear to be slowly coming out of the recession but at a frustratingly slow pace. This means that, for small businesses that have survived thus far, the end may be in sight but with some challenging times still ahead.
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