Continuing UK Recession

By: Ian Campbell | Thu, Jul 26, 2012
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Why Read: Because the United Kingdom is an important world economy, and because continuing recession in the UK does not bode well.

Commentary: It has been announced that:

This is not good, but frankly, I think should not have been unexpected by anyone. Moreover, consider the attribution to holidays is even mentioned as a reason for the decline. There arguably is 'something bordering on desperation' in that.

Q3 might be a different story, as the London Olympic Games then are likely to play a role in the possibility of better growth numbers. However, even if that proves to be the case, watch for poor UK Q4 numbers as all construction related to the Olympics will have largely 'run its course' by then.

The continued UK economic contraction in Q2 has been described by one economist as 'a disappointing outcome', and by another as 'a nasty surprise'. In turn, I find this surprising. Based on my reading and thinking, I would have been surprised if the UK economy had shown growth in Q2.

Context #1: The UK is an important world economy. Positive economic growth is fundamental to a country's economic well-being. What goes on economically in the UK has an indirect effect on what goes on economically elsewhere.

Context #2: When reading what 'experts' have to say - be they economists or 'experts' in other disciplines - consider that what they say should never be accepted simply because they are seen as, or hold themselves out to be, 'experts'.

Topical Reference: UK economy shrinks 0.7pc: economist reaction, from The Telegraph, July 25, 2012 - reading time 2 minutes, viewing time for accompanying video 2 minutes plus.



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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