The Budget - Will the recession be over in a year’s time?

Monday, 20 April 2009 | posted by scott.forbes
General, Politics

A number of media outlets have reported today, that the UK will no longer be in a recession this time next year, with predictions being made by some of the countries biggest forecasters such as; Ernest and Young's ITEM Club and The Confederation of the British Industry.

However the cost of this happening will see 3.25 Million people loose their jobs, but this of course is just a mere prediction ahead of the Chancellor's Budget, which will state this is the worst year for the Economy since the end of World War 2! With the economy shrinking by 1.8% in the first three months of the year, which will continue to fall as low as 4% by the end of 2009, with the economy returning to growth in the seceond quarter of 2010 but only by 0.1%!

With interest rates at a record low and the Bank of England, making its move to boost the money supply through quantitative easing, in the hope to stimulate the economy and to promote lending by banks. Which of course has given grounds for some optimism, but the question is how long will that last for, especially with the current economic situation changing by the day. Also quantitative easing is a risky strategy, that could trigger higher inflation rates, or even hyperinflation if too much money is used and created. So is the risk worth playing?

But looking ahead to Wednesday's Budget, Alistair Darling is expected to freeze the minimum wage rates, as industries struggle to pay staff the staggered rates which is going to cause a stir amongst the Trade Unions. The Chancellor also has 'limited options' in his spending plans, with big cuts to Government Departments and there is less of a focus on the Green Initiatives, which up until last year dominated the Chancellor's Budget with big promises being made. However all that has been laid to rest, as the main focus is on the recession and the current economic situation that is effecting the World on the whole, with trading rates down 9% alone which is expected to rise to just over 14% by the middle of 2010. So the question is will the UK still be in a recession this time next year?

More to come Wednesday, when all eyes will be on the Chancellor's Budget, which is due to be released at 12.30 (GMT)!