The UK economy shrank -1.5% in the first quarter of this year according to a GDP estimate from NIESR, a think tank. The statement accompanying the release said that the current downturn looks “very similar to that of the recession that began in the summer of 1979…if the 1980s profile were followed, output would continue to decline for up to another year and it would take two further years before the level of output enjoyed at the start of 2008 would be reached again.” The current slump has weighed on industrial output and pushed the unemployment rate to the highest in a decade, eroding disposable incomes and discouraging spending. Indeed, Nationwide Consumer Confidence dropped to 41 in March, matching the record low initially set in January. The Bank of England is expected to keep benchmark interest rates on hold at 0.50% later this week, but policymakers will almost certainly announce further quantitative easing measures as they scramble to check the slide in output.
