UK Preview: GDP Expected to Mark the Beginning of UK Recession

Jennifer Rudd/ October 23, 2008/ 4:22 p.m.

Friday's release of GDP in the third quarter is expected to be the first in a series of negative growth data for the United Kingdom, according to economists who have long noted deteriorating conditions for the economy. It seems as if every week the plans that they are trying to get done and utilize aren’t working. However, with weakness the prevalent paradigm for the UK, even an upside surprise may not be taken very seriously. With output in the construction sector likely to have fallen again, we expect a 0.2% fall in overall GDP, the first contraction in the UK economy for sixteen years. Here in the United States, construction is also down, it has not been this low in a long time. You need contracting and blueprints of trying to build up the economy but since times are tough it is hard to fork up that kind of money. The report warns that the contraction won't be the last. The preliminary national accounts release will only contain estimates on the output side of the economy. This is likely to show that service sector activity contracted modestly as it was hit hard by financial sector problems, the deep housing market downturn and markedly reduced consumer spending on services.

Economists say the news should confirm a change in rhetoric in the Bank of England's Monetary Policy Committee. The UK economy probably moved into recession last quarter already. With the sharp contraction in activity likely extending into early next year, they expect to see an ongoing rise in unemployment over coming quarters. Employment rates for that country all already in an all high downturn but this will not help it at all. Here in the United States our employment rates have gone down because of several factors.

I feel that this report was straight to the point with facts and figures to be worried about. The United Kingdom has always seemed like a country that had it all, that had its own independence, and all inclusive with resources. The question that I keep asking myself week to week is why does it seem that globally every country is doomed for a recession? What is causing all of the economies tough times is some way, shape, or form? Hopefully answers are right around the corner.
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