It looks like today could be the day that the U.K. economy officially enters a recession, when official data will confirm that we have had 2 consecutive quarters of negative growth, the standard recession definition.
I don’t think it will actually make much difference to everyone, as we’re already feeling the effects of the recession, but it will be interesting to see how the stock market reacts to the news, as the figures released might not make for pleasant reading. Our GDP is expected to have fallen by 1.2% in the last quarter of 2008, following a fall of 0.6% the previous quarter.
What’s GDP I hear you ask?
Gross Domestic Product (GDP) is a measure of the income and input for a country’s economy (thanks, Wikipedia!) – and as you’re no doubt fully aware, it’s calculated like this:
GDP = consumption + gross investment + government spending + (exports − imports)
So now you know. Despite its flaws, GDP is accepted as one of the better ways of measuring a country’s economy.
Whilst there won’t be a massive fallout from the announcement, it should however end some of the chat about “talking ourselves into a recession” – we’re there now, lets concentrate on minimising the effects and work to get out of it as soon as we can.