30th Dec 09
UK to experience further financial pain in 2010
by Sally Davies
The UK in the first 10 years of the new century has recorded the lowest economic growth of the post-war period and the worst returns for stock market investors since the 1930s.
Data provided by the Office of National Statistics showed that gross domestic product, on average, went up by 1.7 per cent annual in real terms throughout the noughties, Britain’s weakest period of economic expansion of any since the 1940s.
Manufacturing was also hit particularly bad, on average, after taking into account inflation, output actually decreased over the decade by about 1.2 per cent annually.
The British stock market also took a beating during the decade, suffering its weakest performance of any decade since the Great Depression, with prices on the FTSE All Share Index recording negative returns, on average at 1.8 per cent per year.
The particularly sharp decline in the real economy as a result of the financial crisis of the last 18 months keeps fuelling pessimistic assessments of prospects for the UK in the new decade.
It is believed that unemployment in the New Year is likely to rise further from its current rate and those jobs should expect pay packets to rise more slowly, according to financial experts.
In its annual Barometer Report for 2010, the Chartered Institute of Personnel and Development warned that sharply higher unemployment is likely in 2010.
The CIPD claimed that its baseline forecast was that the number of people in work would fall by about 250,000 between the third quarter of 2009 and the second quarter of 2010, with unemployment reaching its peak next summer. The UK has about 2.49 million unemployed workers and, in three months to October, posted the smallest quarterly increase in nearly 18 months.
That, together with a drop in the figures of those seeking unemployment benefits, has prompted some economists to speculate that unemployment had reached a peak and would not come close to the 3 million out of work that had been previously forecast.
CIPD had originally forecast a peak of about 3.2 million in the middle of 2009.
Further to the growing job losses, CIPD warned of a sting in the tail of the recession, as employers assess prospects for the coming year and decide that they need to raise productivity and reduce labour costs.
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