The recession is over: But is Britain better off?

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By Mark Mitchell
Know Your Money Editor

The UK recession is officially over, according to figures released on Tuesday morning (January 26th).

The Office for National Statistics announced that the UK economy grew by 0.1 per cent during the last three months of 2009, ending five consecutive quarters of decline.

However, consumers may be right to remain cautious about the future as the ongoing effects of the economic turbulence may continue to put finances at risk.

Businesses in particular could be at risk of ongoing damage, meaning that job lossses and closures could still occur.

With this in mind, it may be sensible for people to keep tracks of their finances and continue to seek out the best value for money.

What does it mean for the UK?

It has been widely reported that the UK has struggled somewhat in comparison to other economies in terms of recovery from the recession.

Both France and Germany escaped the grip of the recession sooner and by a more comfortable margin of 0.3 per cent when their economies returned to growth.

Citizens Advice chief executive David Harker said: "It's obviously good news that gross domestic product figures reveal that we are coming out of a recession, but for many the impact of the recession will be felt for a long time to come. Some Citizens Advice Bureaux are still seeing people struggling as a result of the last recession."

He added that government measures to address the negative impact of the recession, such as help packages for homeowners, have had a positive effect and helped more people to stay in their homes.

The UK was anticipated to show a growth of 0.4 per cent but fell short of this by a margin on 0.3 per cent, raising concerns that the economy is not in the clear just yet.

Duncan Higgins, senior analyst at Caxton FX, said: "There can be no doubt that growth figures are an important boost to the UK's recovery hopes, however, there are still severe headwinds to be faced. There is has been little data yet this month to suggest strong growth in the first quarter of 2010. With credit conditions yet to ease, it will be sometime before the Bank of England can realistically consider tightening policy.

Are people any better off?

Although it is positive for consumers to emerge from the recession research from Asda found that the average UK family was no better off in December 2009 than the previous year.

The Asda Income Tracker revealed that the average UK household had £163 a week of discretionary income in December 2009, a noticeable reduction from the six per cent year-on-year increase seen in November 2009 and 0.1 per cent lower than the same period in 2008.

Andy Bond, Asda president and chief executive officer, said: "Despite many city economists predicting Britain will pull out of recession this week, the Asda Income Tracker shows family finances are still under considerable pressure."

He added that 2010 is going to be a tough year for its customers and, therefore, it aims to do everything in its power to lower prices and "help ease the strain".

What can be done?

One of the most obvious things for consumers to do may be to shop around to save money wherever they can.

Research from PayPal has revealed that many people are doing just that.

It was found that more than half of the shoppers surveyed - 58 per cent - became more aware of price and 54 per cent started bargain hunting more thanks to the recession. It also discovered that both on and offline Brits were spending less with 28 per cent of shoppers not buying things that were clearly luxuries and 17 per cent choosing quality over quantity.

Ensuring that savings are in place could also be an important factor in the year ahead as more than one in six - 17 per cent - respondents stated that rather than using a credit card, they opted to save up for more expensive purchases.

Important Notice
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