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Jonathan’s Market Analysis – UK GDP

January 31, 2010Article by Ray Withers

Readers, after posting my first blog yesterday I’m feeling more and more like a hybrid of the BBC’s Robert Peston and CNN’s Richard Quest… a delightful thought.

Anyway, after this mornings Office of National Statistics upbeat review of official GDP estimates, I thought I’d throw together a brief commentary on current economic events.

It goes without saying that the UK economy has witnessed a hard and prolonged period of negative growth – six consecutive quarters to be precise – and the positive news of a 0.1% increase certainly provides some respite. However, the stats do conceal the fact that many analyst’s anticipated GDP returns of at least 0.2% – 0.4%; in response, this may either add fuel to market speculation concerning the long term sustainability of the recovery, and the fear of a double-dip, or conversely, lead to an outcry from analysts’ who believe the figures to be grossly undervalued.

When broken down, the fact remains that the UK has been the last of the major world players to pull itself out of recession, while ONS stats also indicate a GDP contraction of 4.8% in 2009; reported to be the biggest yearly retrenchment since records began!

On paper however I’m sure Mr Darling will be somewhat relieved that his earlier forecasts on a return to growth have been loosely correct… although clearly we did not lead the world out the global recession as anticipated! I don’t want to take anything away from what is important here… clearly the measures taken by the Labour Government and BoE – low interest rates, tax incentives, car scrappage schemes, QE and the well documented bank bailouts – have gone someway to pulling the economy in the right direction, but this positive news needs to be sustained in the long term. With this in mind, the revised ONS figures due for release in early February will likely provide a better indication of the UK’s position in the current economic the cycle.

Thanks for reading.

Jonathan

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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