After what seems like a lifetime of writing about banking collapses, home repossessions and unemployment, the UK has officially and finally pulled out of the recession.
According to government figures, the UK economy increased its output in the fourth quarter of 2009 and achieved growth of 0.1 per cent.
Granted, there weren’t as many sales around in high street stores over the Xmas period, which indicated that retailers weren’t struggling as much as they were the year before and that the economy was perhaps beginning to recover.
But can we really say we’re out of the woods yet?
On paper, we may have turned the corner on the downturn, but in reality the UK has been slow to do so when compared with its European neighbours, such as Germany and France which came out of the recession last summer.
So what does it all mean? Just because the figures say the recession is over it doesn’t mean we’re all feeling the joys of spring, mainly because there are still 2.46 million people out of work.
But it wouldn’t be right to ignore some improvements in the labour market and latest employment figures show that the number of unemployed fell by 7,000 in the period between September and November 2009.
So should we start believing the recession is really over and be a bit more carefree with our money again? Personally, I don’t think so and the recent rise in inflation simply indicates that we are not out of the woods yet.
In fact, the rise in inflation from 1.9 per cent to 2.9 per cent between November and December– suggests that we should be on alert when it comes to being frivolous with our finances, particularly as this impacts the rates some of us will pay on our mortgages. (See: Sky-high inflation means mortgage rates could rise.)
Throw into the mix, the upcoming Budget and General Election and the months ahead seem a bit uncertain, which is why when it comes to economic recovery I’m going to continue to be cautiously optimistic and keep a close eye on my cash.
So is this really the end of a bad economic spate for the UK or will we take a while to recover yet?
