Britain is now on par with the very worst of the great depression, with the economy shrinking by 4.9% in the year to the first quarter of 2009, according to the Office for National Statistics (ONS).
The fall in gross domestic product has been greater than had previously been calculated, as Government statisticians have become aware of the full scale of the fall in company activity and resulting falling tax revenue. According to the ONS, the contraction in GDP during the first quarter of this year alone was 2.4%, compared with previous estimates of 1.9%, representing the biggest one-quarter fall in 35 years with the 4.9% annual fall the biggest since Government records began.
Interest rates have started to rise with inflation worries on the horizon, and economists have also warned that despite the scale of the recession faced by the UK, the Treasury has little further capacity to borrow more. In such a financial hole, rumours are that the Government will be selling assets including Northern Rock to the highest bidder -- and Tesco has been suggested. The Governor of the Bank of England recently also described the scale of Britain’s budget deficit as “truly extraordinary”, and criticised the track record on fiscal policy, adding that the Government needed to have a “slightly greater ambition” to bring borrowing down.