Prolonged recession forecast
With new figures officially confirming that the UK economy is in recession, analysts and business owners are predicting a long haul to recovery.
According to the Office for National Statistics, gross domestic product slumped by 1.5 per cent in the final three months of 2008, compounding a contraction of 0.6 per cent in the third quarter of the year.
Two or more consecutive quarters of negative growth are accepted as a definition of recession.
The fall of 1.5 per cent, which represents the sharpest quarterly downturn since 1980, was worse than had been predicted: analysts were expecting a decline of 1.2 per cent.
Observers are forecasting that the recession will continue for as many as four or five quarters, lasting throughout 2009 and perhaps into 2010.
The rate of deterioration has prompted some to predict that GDP will shrink by 2.1 per cent in 2009, worse than the 1.5 per cent annual contraction that had been assumed as a consensus figure as recently as last month.
The likely severity of the recession was echoed by the findings of a December poll of small business owners. On average, respondents thought that the downturn would last for just shy of two years, while a pessimistic 20 per cent anticipated a three-year recession.
Despite the gloom, some 77 per cent of those questioned saw sales growing in 2009, with 60 per cent planning to diversify in order to beat the downturn and over half intending to boost their marketing activities.