Gross Domestic Product (GDP) dropped 1.5 per cent during the past three months, which is the sharpest fall since 1980.
On the back of the news, sterling fell to its lowest point against the US dollar for 25 years, hitting $1.35. FC Exchange MD Nick Fullerton says: “The fact the UK is now officially in a recession will not help us in the long-run. The only way we’ll see a climb against other currencies is if they become weaker because sterling has little hope of strengthening anytime soon.”
CBI deputy director-general John Cridland notes that the numbers are much worse than expected. “The intensity and speed of falling demand combined with the global credit crunch mean this recession is going to be more painful than the early nineties, and sadly one consequence of this will be much higher unemployment,” he says.
“Looking ahead, we hope the impact of interest rate cuts, falling inflation, the fiscal stimulus and the government’s recent measures to kick-start lending will have a stabilising effect later this year.”
Gabriel Behr is the finance director of UPP, which provides on-campus student accommodation in the UK. Behr believes the UK won’t see even a partial recovery until later next year.
“The confirmation that we’re in recession comes as no surprise whatsoever," he says. "That’s been pretty clear in terms of our market. University applications are significantly up on last year and that’s always an indication that youngsters and older people looking for further education are struggling in the job market.”