Ian Brinkley
The most recent growth figures (GDP) are a reminder that economic forecasting is a mug’s game. They show the UK economy was still contracting in the third quarter of 2009. Taking other indicators into account, we are still likely to be at a turning point and the numbers may well be revised upwards later this year.
But it is a salutary reminder of how easily hopes of an early recovery can be dashed. We have even less idea of the shape of the recovery – whether it will be a V, W or some other letter. The longer-term impact of the credit crunch on investment and consumer spending and the effectiveness of measures to free up the supply of credit – including “quantitative easing” – are still unknown. The only thing we can be fairly sure of is that the recovery in output to pre-recession levels will take no more than 4 years (a similar period to the Great Depression in the 1930s).
