The first estimate of UK Gross Domestic Product for the third quarter of this year was published today. Economists had expected the economy to grow by 0.2% but instead it appears it shrank by 0.4%, making this the longest recession since records began. What to make of it?
The first thing to note is that this is the first estimate and it will be revised; that means it could be revised up.
Second, it is possible that as more data is factored in it will be become apparent that the economy was rebounding faster in September than this intial estimate reveals.
However, whether or not the headline GDP growth figure is revised, this announcement does remind us that the financial crisis has had severe implications for the economy. It will take time to recover. The real test is what is happening now. While we ponder over GDP (negative) growth in July to September, the economy could now be in positive growth and given that GDP fell in Q4 2008, the year on year comparisons could look very good indeed. More on what's happening in the economy at a later date.
Meanwhile we can say again that Alistair Darling is right; Conservative calls to cut public spending now would risk even a Depression.