Analysts: 'The recession has ended'

The National Institute of Economic and Social Research (NIESR), a body known for it's accuracy, have said that the UK recession is coming to an end.

The institute says that the economy grew by about 0.2 per cent in April and by 0.1 per cent last month. Although hardly a return to the boom conditions that prevailed before the credit crunch, these figures mark the end of more than a year of stagnation and recession, and stand in stark contrast to the grimmest predictions of a 1930s-style slump. Ray Barrell, director of forecasting at the institute, said that "the evidence from the last few months is that we may well have reached the bottom of the depression".

The Bank of England's radical cuts in interest rates and its programme of "quantitative easing" – injecting cash directly into the economy – were singled out by the NIESR as major reasons for the turnaround. According to the institute, if the recovery is sustained then the current downturn will have been less severe than those of the 1930s and the 1980s, although still more grievous than the one the economy went through in the early 1990s.

If the economy has indeed returned to growth when the official figures for the second quarter of this year are announced next month, then the Chancellor's forecast in his Budget in April that the UK would return to growth by the end of the year will have been delivered spectacularly early.

I, obviously, have no idea whether or not the predictions of the NIESR are correct, but it is some indication of the rashness of writing of the Labour party one year before they have to go to the polls.

They say a week is a long time in politics, as the last one amply demonstrated, but we can all agree that a year is an eternity.

No-one can accurately predict where we will be next May, which is why, although I fully expect Labour to be trounced at the next election, I still don't regard that as set in stone.

Remember, Cameron's reaction to the economic downturn was to do nothing and to allow the recession to take it's toll.

A Downing Street spokesman said: "There are signs that the Government's actions to support the economy through this difficult downturn are having an effect but there are absolutely no grounds for complacency."

Maybe Cameron will be elected no matter what the markets do, perhaps people simply think it's time for a change. But, if people were to actually think about who is better at handling the economy, then - on this evidence - Brown would leave Cameron behind by miles.

Alan Clarke, an analyst with BNP Paribas, agreed. "We are accumulating more and more evidence that the recession is over. To be clear, we are not heading for a boom. The economy is still likely to grow much slower than potential, in turn meaning that unemployment will continue to rise. But the point is that the economy is no longer shrinking."

It's early days, but it's an indication that next year this might all look very different.

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Tags: Brown, Cameron, recession, UK politics