The announcement that GDP fell by 0.4% in the third quarter of 2009 has taken the majority of analysts by surprise, many had been expecting positive growth of around 0.2%
Since the current recession started in 2008 we have now experienced a fall in GDP of around 5.9%, similar to the severe recession at the end of the 1970s. Perhaps more worryingly is the fact that the economy contracted in all major sectors with production falling 0.7% and services falling 0.2%.
Some had been predicting that the bank was coming to the end of its £175bn quantitative easing programme. But with the latest GDP figures it may suggest that there will be some more quantitative easing to follow.
If we go back to the words earlier this week from Mervyn King, then it seems that the Bank of England’s view is that we will probably return to growth in the “second half of 2009”, so we have one more quarter to go to (hopefully) see a return to growth in GDP.
