An economist at BNP Paribas has predicted that the UK economy will not recover quickly, even though it has probably emerged from the recession.
Alan Clarke stated that necessary responses to the effects of the credit crunch such as fiscal tightening – a government policy of increasing taxes and reducing spending – will slow down the resurgence.
Furthermore: “Unemployment is still going to be rising – it is going to be awful for a long time to come.”
Mr Clarke added that it needs to be made clear that while it may be shown that the UK is out of the recession during the third quarter of this year, this simply indicates that no more contractions are taking place.
The rate of growth will likely not be much higher than zero per cent, he explained, with the prospect of another boom period a long way off.
Such a situation may mean interest rates remain low for many months to come.
Last week, the Bank of England declared that the global economy remains in recession.