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U.K. Economy Unexpectedly Shrinks in Longest Slump
Jennifer Ryan
Bloomberg
Friday, Oct 23rd, 2009
U.K. gross domestic product unexpectedly dropped
in the third quarter as enduring slumps in services, manufacturing
and construction kept the economy mired in its longest recession
on record. The pound tumbled.
GDP fell 0.4 percent from the previous three months, the Office
for National Statistics said today in London. Economists predicted
a 0.2 percent increase, according to the median of 33 forecasts
in a Bloomberg News survey. None forecast a contraction. The
economy has now shrunk over six quarters, the most since records
began in 1955.
The figures add to Prime Minister Gordon Brown’s woes
as he struggles to cement a recovery in time for a general election
due by June, and suggest Bank of England officials may need
to extend their bond-purchase program on Nov. 5. Chancellor
of the Exchequer Alistair Darling said today he stands by his
forecast that the economy will start growing this year.
“The fact that the economy is still contracting despite
the huge amount of policy stimulus supports our view that the
recovery will be a long, slow process,” said Vicky Redwood,
U.K. economist at Capital Economics Ltd in London and a former
central bank official. “An extension to QE at the upcoming
November meeting now looks even more likely.”
Full
article here
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