UK recession │ Is it over?

10 June 2009 │ Addition: 7 July 2009

The worst may be over, and the situation may be stabilizing. Thankfully, there has been no complete meltdown, which looked a distinct possibility last autumn. So that’s good news. Hooray! But do I hear uncorking of champagne (or cava)?

I doubt people will be celebrating, as there will be more job cuts to come, and while the statistics may be saying the British economy is out of the recession, most people will not be feeling the benefit. So many jobs have been lost already and so much of the economic activities has ceased, economic recovery won’t be quick, and it shouldn’t be bubbly, leading to another bout of casino capitalism.

It seems likely, as was the case with manufacturing previously, that companies in the service sector are realizing that they can be leaner, and they do not need to employ the same number of workers they did before the recession. Recession intensifies competition initially, as companies chase after the shrinking pie: badly managed or conceived companies will only get morsels of the pie, starve, and die. Once lean and mean, the surviving companies would want to keep their competitive edge and would abhor adding costs. More and more work can be done cheaper abroad or automated, or employment may become more casual, where employees are paid less or have less secure jobs.

Added: 07/07/2009

NIESR’s initial assessment was too optimistic: see The Times: Economists quash hopes of end to UK recession.