Join        Login             Stock Quote

The Incredible Shrinking UK Economy

 January 18, 2012 04:07 PM

The magnitude of the blow suffered by the UK economy since the beginning of the financial crisis is very considerably minimized by not presenting it in terms of a common international yardstick. Gauged by decline in GDP, using a common international purchasing measure, dollars, no other economy in the world has shrunk even remotely as much as the UK (Figure 1 and Table 1).

As most countries produce only annualized GDP data it will be necessary to wait before a comprehensive global comparison can be made for 2011. However it is clear no substantial growth in dollar terms took place in the UK economy during that year – GDP at national current prices rose only 1.4 per cent between the 1st and 3rd quarters and the change in the pound's exchange rate against the dollar during the year was a marginal 0.3 per cent. Therefore there will have been no significant recovery from the UK data set out in Table 1 below, and the gap between the UK and other European economies, which form the next worst performing major group, is too great to have been qualitatively affected by changes in the Euro's exchange rate – the Euro declined against the pound by only 3.3 per cent in 2011.

[Related -Mr. Market's Wary Outlook: Less Severe But Still Worrisome]

Table 1 shows that the fall in UK GDP in 2007-2010 was $562 billion compared to the next worst performing national economy, Italy, with a decline of $65 billion – i.e. the decline in UK GDP in the common measuring yardstick of dollars was more than eight times that of the next worst performing national economy. Table 1 shows the 10 national economies suffering the greatest declines in dollar GDP.

[Related -There's One Problem With This Market Rally...]

It is also extremely striking that the UK's decline was more than two and a half times that of the entire Eurozone. The UK accounted for a somewhat astonishing 77 per cent of the EU's decline.

Table 1

12 01 13 Table 1

Figure 1

12 01 13 UK GDP decline in dollars


Expressed in percentage terms the situation is no better.

Next Page >>12
iOnTheMarket Premium


Comments Closed

rss feed

Latest Stories

article imageMr. Market's Wary Outlook: Less Severe But Still Worrisome

Mr. Market’s cautious outlook of late is less acute at the moment relative to recent history, but it’s not read on...

article imageThere's One Problem With This Market Rally...

All major U.S. indices closed higher last week, logging the second week of strength following choppy read on...

article imageWill Last Week’s Relief Rally In Emerging Markets Last?

Stocks in emerging markets posted their best weekly gain in nearly four years last week. Analysts are read on...

article imageHow Much Longer Can Our Unaffordable Housing Prices Last?

Markets discover price via supply and demand: Big demand + limited supply = rising prices. Abundant supply read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Bulls Rally, but Bears Lurk
More Articles on: Finance

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.