« Is "inflation targeting lite" contributing to sterling weakness? | Main | UK monetary conditions too loose despite weak M4 »

UK recession, ex oil, less severe than 1979-81

Posted on Tuesday, March 2, 2010 at 01:48PM by Registered CommenterSimon Ward | CommentsPost a Comment

GDP fell by 6.2% between the first quarter of 2008 and the third quarter of 2009 before recovering in the fourth quarter. The drop exceeds the peak-to-trough decline of 6.0% during the 1979-81 recession.

The recent GDP reduction, however, was magnified by a large fall in oil and gas production, reflecting reserves depletion. Oil output rose during the 1979-81 recession, when the North Sea was coming on stream.

With North Sea production driven by supply capacity rather than domestic or global demand, it may be more appropriate to focus on non-oil output when comparing economic weakness across cycles.

On this basis, the recent recession was less severe than 1979-81: the peak-to-trough fall in non-oil "gross value added" is currently estimated at 5.8% versus 6.4% – see chart.



PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>