Its Official...UK in recession as economy slides

The UK is now in recession for the first time since 1991, official government figures have confirmed.

Gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter.

That means that the widely accepted definition of a recession - two consecutive quarters of falling economic growth - has been met.

It represents the biggest quarter-on-quarter decline since 1980, and a 1.8% fall on the same quarter a year ago.

The news sent sterling to a 24-year low against the dollar, with one pound buying $1.3612.

The figures, from the Office for National Statistics, showed that manufacturing made the largest contribution to the slowdown, contracting by 4.6% after a 1.6% per cent decrease in the previous quarter.

'Grim'

What started as a crisis in the financial sector continues to infect the wider economy.

RECORD QUARTERS


Biggest post-war quarterly decline was -2.6% in Q2 1958


Largest drop in one quarter over previous year was -4.1% in Q4 1980


Worst fall in one quarter on previous year in 1990s recession was -2.2% in Q2 1991


Recession tracker: GDP in graphics

Unemployment is accelerating sharply, with 1.92 million people now out of work, the housing market remains severely depressed and retail sales are weak, though December figures were better than expected, growing by 1.6%.

"It is difficult to see why things should improve in the foreseeable future," said Andrew Smith, chief economist at KPMG.

Neil Mackinnon, chief economist at ECU Group, said the GDP figures were "grim" and underscored the depth of the recession.

"There are no green shoots of recovery, no light at the end of the tunnel," he added.

The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five.

In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s.

GDP is the most commonly used indicator of national income.



Four leading economists told the BBC's Robert Peston what signs they will be looking for to signal that the worst is over.
It attempts to measure the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries.

The consensus forecast for 2009 as a whole is now for a 2.1% decline in GDP.

As recently as December, the forecast was for a drop of 1.5%.

This highlights the rapidly deteriorating economic picture over recent weeks, during which a number of the UK's best known high street retailers, such as Woolworths and Zavvi, have gone into administration.

The pound has slumped against the euro and many analysts believe that parity is now inevitable. Sterling also hit a seven-year low against the dollar this week.

International investors are said to be losing confidence in the UK economy and the government's attempts to kick-start lending from the banks.

The official government forecast is for a decline of 0.75% to 1.25% in 2009, although the Chancellor Alistair Darling has indicated that he will revising this figure in the Budget.

Injection

Efforts to prevent recession deepening have been widespread, though critics say they have not gone far enough.

The Bank of England has aggressively cut interest rates to 1.5% - aimed at driving down the cost of lending and making it easier for consumers and businesses to access credit.

However banks have been reluctant to lend sufficiently, despite a £37bn injection into major banks, and a scheme to offer insurance to banks against potential losses on risky loans.

A temporary cut in value added tax (VAT), from 17.5% to 15%, was an attempt to encourage consumers to spend and boost the retail sector and wider economy. (BBC News)

British workers could
have their working week cut to three days under plans being considered
by the government to help companies cope with recession.
The
government is understood to be considering paying firms to cut the
working hours of thousands of staff instead of retrenching them in an
attempt to stop unemployment soaring past two million.
Now business secretary Stephen Mandelson is facing calls to offer compensation for workers who have their hours cut.
Unnamed
ministerial sources told The Observer newspaper that a compensation
scheme for workers was an option being discussed but was "not imminent".
"Government
sources said there were issues about whether to restrict compensation
to the car industry or apply it to all firms," the newspaper said.
The
Department for Business is already advising employers on its website to
consider cutting staff hours as a way to save money, saying it might be
better than making staff redundant.
Similar
measures were after a series of crippling strikes by mine workers in
the 1970s which had dramatic knock-on effects through the rest of the
nation's economy.
Former prime minister Margaret
Thatcher introduced a short-time working directive in the 1980s to
cover earnings lost through shorter hours.




Things do not look good do they !

how long before guernsey is in the same predicament.so much for the growth twotty told us we would have to compensate for 0/10

Steelmaker Corus is set to cut 3,500 jobs worldwide, including more than 2,500 in the UK, the BBC understands.
Corus said it could not comment on rumour or speculation, but the
company, like all steelmakers, is facing an unprecedented downturn in
demand.
One union official told the BBC Corus would announce its restructuring plans to workers at 0930 GMT on Monday.
Corus, a subsidiary of India's Tata Steel, employs 24,000 people in the UK and 42,000 worldwide.
According to the Sunday Times, the Anglo-Dutch steelmaker is not planning to close any of its British plants.

Corus's main UK sites are at Port Talbot, Scunthorpe and Teesside. It also has a site in Rotherham.
Mick Fell, union chairman at Scunthorpe, said he did not anticipate
there would be any job losses there, but said he imagined workers would
be "quite nervous" ahead of Monday morning's announcement. A spokesman for Community trade union, which represents
steelworkers, said the reported job cut figures may have been
"exaggerated". He went on: "Any job cuts that damage the viability and
long-term future of the steel industry will be looked on unfavourably."
He added that the union was committed to defending the jobs and terms and conditions of its members.


'Support workers'


Rotherham MP Denis MacShane said he had spent the weekend urging Corus
to maintain the production capacity in Rotherham and South Yorkshire so
"once the world slump in demand for steel is over the UK will remain a
steel-making economy".

He said: "The government has found billions for the banks and must do
what it takes to support steelworkers and their families as we go
through this global recession." "Corus has invested in training a new generation of
steel-workers and ways should be found to keep them operational rather
than see steel-making disappear from the UK." A 40% fall in global
demand for steel from its peak of last year caused Corus's order book
to drop by more than a third.Steel prices have fallen by half since
last September.
The company has already announced swift measures to reduce costs.

"I understand that the cuts at Europe's second-largest steelmaker have
been brought forward as a result of the downturn, but it was clear to
[its soon-to-retire chief executive] Mr Varin that Corus needed to
become more efficient in any case," said Robert Peston. Steelmakers around the world have been hit by falling
demand from carmakers, shipbuilders, construction and heavy engineering
sectors, which, in turn, have seen demand for their products drop.


Corus was formed in 1999 through the merger of British Steel and
Koninklijke Hoogovens. In 2007, it became a subsidiary of Tata Steel.
Corus claims to be Europe's second-largest steelmaker, producing 20m
tonnes of crude steel every year.Its annual revenues are about £12bn
($16.3bn).

The company has requested financial help from the UK government for a
rolling programme of providing new skills to its entire workforce.
"This would take the form of a state top-up for the wages of employees," said Robert Peston.





It must be terrible just waiting to hear if you still have a job in the morning .

Shop Direct job losses




Direct Group has announced that 1,150 employees will be made redundant
as the company continues with its ongoing transformation to become an
online-led business

In
a statement, the company announced that its Crosby call centre will be
closed as well as a limited number of changes at other some other
sites, resulting in 1,150 job losses.
Shop Direct is entering a 90-day consultation period with the employees who will be affected.

Mark Newton Jones, chief executive, said: “We
recognise that this will be a difficult time for those members of our
team impacted by today’s announcement. We do hope to relocate 250 of
them and we will do everything we can to support those affected. Our
business is changing because the way our customers choose to shop with
us is changing. We anticipate that 70% of our sales will be online by
2010/11 and, therefore, the future of our business is online-led. We
are a strong and growing business. In order to maintain this growth, we
need to continue to adapt and change to the needs of our customers.”

In
its January trading statement, Shop Direct announced that sales were up
9% for the six-week period, with an online sales increase of 44%. Shop
Direct's online sales now represent 56% of the group's total sales.



Its grim news ,its thousands everyday.

Boeing says it will cut 10,000 jobs this year, about 6% of its total workforce, in response to the global economic crisis.
That includes the 4,500 job cuts announced by the commercial aircraft division earlier this month.
Boeing made a loss in the final three months of 2008 after a strike by workers disrupted aircraft deliveries.
The aerospace firm made a loss of $56m (£39m) in the quarter, compared with a profit of $1.03bn a year ago.
The loss was caused by a 58-day strike by Boeing's
machinists' union and charges related to delays on its redesigned 747
freighter aircraft.
The strike by assembly workers prevented delivery of about 70 Boeing planes.
Boeing has been losing ground to rival European planemaker Airbus,
which delivered and received more orders for planes than Boeing last
year.
Airlines are expected to cut spending on new jets as the economic downturn hits demand for air travel.
"The global economy continues to weaken, and it's affecting air
traffic and financing," said Jim McNerney, Boeing chief executive.
"We must prepare the company, including being more aggressive in terms of productivity."
He said the 10,000 cuts would be made "through attrition, retirement and layoffs".
Boeing employs about 600 people in the UK. The company has not revealed where the cuts will be made.