Is the UK Recession Coming to an End?

There have been reports of increasing activity in the UK housing market since April, and because of low supply this has translated into monthly price increases in April and May, and the quarterly and Annual indices showing the decline slowing considerably.

Positive news is also starting to emerge on the UK economy, with some analysts even saying that the UK recession has bottomed, though they are not forecasting a swift recovery because unemployment continues to rise, the banking system remains weak and consumer spending subdued.

My first hit of positive news was that UK Gross Domestic Product grew by 0.1% in May according to the National Institute of Economic and Social Research, as reported by the Telegraph. The NIESR also found that the decline in GDP in the three months ending May slowed to 0.9% against a drop of 1.5% in the three months ending April.

I did a little digging myself and found yet more positive news. According to the Office of National Statistics the volume of retail sales in April was 2.6 per cent higher than in April 2008. The ONS also found a 0.2% increase in manufacturing output in March compared to February, and total production output increased by 0.3% between March and April.

According to the ONS, total UK production output fell by 3.6% in the three months ending April compared to the previous 3 months, a fall of 12.6% on the same period last year. This means that rises in the monthly data do indeed signal that things are turning around in the UK economy.

This is a view voiced very loudly by Martin Weale, director at NIESR, who said the monthly figures pointed to "March as having been the trough of the depression".

However, both Paul Tucker, a deputy governor of the Bank of England, and David Kern chief economist at the British Chambers of Commerce are advising caution. Tucker says that it won't be until Autumn that we can get a clear understanding of what is happening in the economy, while Kern said: "By any longer-term perspective, manufacturing is in deep decline of more than 13pc compared with a year earlier."

As my regular readers will know, I am always very cautious when it comes to positive reports on the housing market, because of my very dim outlook on the British economy. However, there does seem to be an air of change for the better, and as a Brit I can't help feeling a little bit happy about it.