Seeds of recovery?
UK industrial production declined by 1.8 per cent (source: National Statistics) in the three months to May...
...a sharp slowdown, but a much smaller decline than that experienced earlier in the year. Is this a good sign for the economy?
Looking forward, more stable consumer expenditure, helped by lower interest rates, an end to stock reductions by industry and continued high levels of government spending, all suggest that overall economic activity should stabilise in the second half of the year and could begin to expand again late in 2009.
Welcome though this upturn is it has to be kept in context and the overriding problem for the economy – the shortage of credit – will mean that when it comes the recovery will be weak by historic standards and stretched out over several years.
Author: John Kelly
Head of client investment at CCLA
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