Well the long-awaited Friday has come and Office for National Statistics has revealed its preliminary estimates on UK’s GDP. On the contrary to the economist’s forecasts that UK’s economy will grow by at least 0.2% increase, the data shows that output fell 0.4% in Q3 from the Q2 in 2009. This decline in GDP makes “this the longest recession the British economy has experienced since records began in 1955. Because of this unexpected decline, Gordon Brown has received a lot of criticism on his “rescue plan” which turned to be a complete failure the minute the GDP was published on Friday.
I read several stories from Telegraph.co.uk, The Wall Street Journal, Bloomberg.com, Money Marketing and none of them in particular have anything positive to say. Each article discuses how disappointing the news is and some chose to discuss politics and Labour Party.
After all the speculations in the media about recovery in past few weeks this news of UK’s economy shrinking really comes as a shock. It made me think whether the media was actually trying to make people more confident and get them spending because there was a fear all along that something like this might happen?
The main story is as I already stated above the UK’s decline in GDP which is suggesting that we are still in recession. This would be 6th consecutive quarter of falling GDP and in comparison to our neighbours we are not doing well. One of the stories from Telegraph.co.uk is all about comparing Britain to the rest of the world. According to them France, Germany, Japan, and China are out of recession whereas Spain and US are still “in the game” with UK. I think it can be argued is China was ever in the recession; their exports declined as countries around the world stopped buying their cheap products but China managed to expand it economy in Q3 2009 by 8.9% compared to the same period last year. If you ask me, they were never in recession. However if you were to ask me why the UK , also known as 6th largest economy in the world, is ‘behind’ its peers I would say because UK relies much more on financial sector than any other neighbour country. I do not think we should be too much worried about this ‘falling behind’ because we have a greater fear of enjoying even slower economic growth due to prior high dependence on City, poor public finances and our log-term need to increase savings. Poor confidence is what’s holding back UK’s economy. I do believe that UK can benefit from their neighbour’s recovery in terms of more investment, higher export revenures. Our currency dropped 1.2 percent to $1.6421 and 1.2 percent against euro to 91.29 pence after the data was published.
Telegraph and Wall Street Journal both started off with the headline directly attacking Gordon Brown and his Labour government. “Britain still in recession: Gordon Brown’s rescue plan accused of failure” and “UK Economy Shrinks, Dealing Blow to Brown”. Bloomberg and Money Marketing focus more on the new, facts and figures. There is little bias present if any in all articles; it could be argued that Telegraph and Wall Street Journal are on the side of Conservative Party because in their articles there is more negative note to the government for Gordon Brown and this failure to pull us out of recession. Articles are easy to read as long as you have some basic knowledge of economics and finance. The story is big and will have a great influence on the economy as we have seen what happened to the currency when data was published. I am just concerned that this will decrease the confidence even further.
Sources:
Telegraph.co.uk http://www.telegraph.co.uk/finance/financetopics/recession/6415120/Britain-still-in-recession-Gordon-Browns-rescue-plan-accused-of-failure.html
The Wall Street Journal - http://online.wsj.com/article/SB125628626596003463.html
Telepraph.co.uk - http://www.telegraph.co.uk/finance/financetopics/recession/6414851/Recession-how-Britain-compares-with-the-rest-of-the-world.html
Bloomberg - http://www.bloomberg.co.uk/apps/news?pid=20601087&sid=aj5TAN5rzuJk
Money Marketing - http://www.moneymarketing.co.uk/uk-in-longest-recession-on-record/1000802.article
AS
Well argued and researched. 6.5/10
ReplyDelete