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Friday, 28 August 2009

UK economy contracts by 0.7%

The UK economy shrank by 0.7 per cent in the second quarter, according to the ONS. Let's get this right before all the media jump on the story. This isn't better than the 2.4 per cent decline seen in the first quarter of the year, it is 0.7 per cent worse, and it is worse than many of the pundits had forecast.

This is a 5.5% decline year on year, which once again is the largest such decline since records began.

While France, Germany, Japan and Hong Kong, countries who have largely shunned the ideas of fiscal stimulus, cash for clunkers and quantitative easing have broken out of recession and are now showing economic growth, the UK and the US are still on a downward trend, with a lack of investment and ballooning government debt suggesting that situation will continue.

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