Economy shows signs of recovery, says OECD
Signs that the UK economy is no longer in decline have prompted the Organisation for Economic Co-operation and Development (OECD) to say that them worst of the recession may be over.
The OECD’s leading indicators survey – which is driven by interest rates, business surveys and other financial markers – found that the UK economy progressed from being in a ‘strong slowdown’ to a ‘possible trough’ in March.
“The overall message is that the economy might be bad, but it’s definitely not getting worse,”
said OECD head of composite leading indicators, Gyorgy Gyomai.
“We have seen small signs that the economy will return to its long-term potential. While we cannot know for sure whether this will eventually happen, the data for March showed positive changes.
“The economy continues to under-perform, but there are signs that there will be a turnaround late in the third quarter of 2009,” he added.
In addition to the OECD’s survey, analysts believe there are further signs that the economy is recovering. The Council of Mortgage Lenders reported a 29 per cent increase in mortgage lending in March – indicating a possible revival in the housing market.
On the high street, like-for-like retail sales jumped by 4.6 per cent in April 2009 compared with the same month last year, according to the British Retail Consortium.
However, British Chambers of Commerce (BCC) spokesman Sam Turvey said that although the decline seems to be slowing, it is too early to expect a recovery.
“Essentially there are a lot of reports and surveys coming out at the moment that show a slowing in the decline,” said Turvey. “However, there’s still a lot of concern for businesses in this recession and they will need to retain their focus on cashflow issues.
“It’s a bit too early to be shouting about signs of recovery yet,” he added. “The BCC has found that for some sectors, such as services, the rate of decline is slowing, but for manufacturing it isn’t – it’s very early to say we’re through the worst of it yet.”
According to the latest forecast from the Bank of England, the economy will not begin to grow until the middle of 2010. According to Bank of England governor, Mervyn King:
“There are pretty solid reasons for supposing that there will be a recovery next year, but also pretty solid reasons for questioning whether that will be sustained”