Double-dip recession is here to stay
Jun 14, 2012
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Poor official manufacturing figures this week suggested that Britain’s double-dip recession will last another quarter. Manufacturing output fell 0.7% in the month of April, leaving it 0.3% down on the year. Output remains 8% below its early 2008 peak. The wider measure of industrial production, which includes energy and mining, was flat in April and 1% down on the year. The National Institute of Economic and Social Research said the economy wouldn’t reach its 2008 level of GDP until 2014.
What the commentators said
The manufacturing sector is “finding it hard to sell to a home market where consumers are wary and businesses reluctant to invest”, said Larry Elliot in The Guardian, while the deteriorating eurozone has hampered exports. Manufacturers are “at the mercy of the ongoing eurozone crisis”, said Nida Ali of the Ernst & Young ITEM Club.
The sector is likely to be a drag on growth this quarter, when the extra bank holiday is already set to hit output. However, Chancellor George Osborne is wrong to blame Europe for our comparatively poor recovery from the crisis, said Jeremy Warner on Telegraph.co.uk. It’s actually due to “subdued household consumption”.
After a dramatic rise in household indebtedness, consumers would always have been inclined to rebuild their savings post-crisis, but they have also suffered the worst squeeze in disposable income since the 1920s in the past two years. Getting household spending back on a sustainable path will take several more years, said Warner, so “we can expect demand in the UK economy to remain weak for quite a while yet – almost regardless of what happens in the eurozone”.
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