Business News |
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UK economy grows more slowly than predicted
The UK avoided a double-dip recession in the first quarter of 2010, although the recovery was weaker than expected.
GDP had been widely expected to rise by 0.4 percent between January and March, as it had in the final quarter of 2009. However, the actual growth was just 0.2 percent, proving how fragile the recovery is.
Manufacturing and consumer spending were hit hard by January’s arctic weather, although economic activity recovered pretty well in the following two months.
The continued recovery is likely to prompt further questions about the best time to withdraw the financial stimuli implemented at the peak of the crisis. Interest rates have stayed at their record low of 0.5 percent for the thirteenth month, while some banks were bailed out by the taxpayer last year.
However, with the banks still weighed down by bad debt – despite the bailout, the housing market remaining fragile and unemployment at its highest level since 1994, a cautious approach is still necessary.
