The UK may finally have exited the worst recession since World War Two, but do not be fooled, tough times loom, experts say.
GDP rose 0.1% for Q4 2009, the Office for National Statistics announced today. The figures mean the UK has officially left recession, albeit six months after Germany and France.
Financial industry experts are welcoming the increase, but warn the champagne will need to stay on ice for some time to come.
Azad Zangana, European Economist at Schroders, says: "The 0.1% rise in GDP growth in Q4 was far lower than city consensus of 0.4%.
"Today's data indicates the start of an extremely fragile recovery, which has been highly reliant on support from fiscal and monetary policy. We estimate it will be at least three years before the UK returns to the level of output achieved in 2007, and as a result the Bank of England will keep interest rates on hold, at least until there is some evidence of the recovery gathering pace."
"Early fiscal or monetary policy tightening could easily push the UK economy under the water again."
Analysts expect today's figures will disappoint investors given the huge amount of stimulus employed by the authorities to boost the economy.
John Whipple, IFA, Guardian Associates, says: "A statistical error of 0.5% in the official figure means 0.1% is still flat. The good news is we could be bumping along the bottom; the bad news is QE is costing £500m a day in new unearned debt to stay bumping along the bottom."
More optimistic, Stuart Law, chief executive, Assetz, says the GDP rise supports positive sentiment the economy has left recession..
Though he remains cautious going ahead: "We do not expect as rapid a recovery in the general economy as we have seen in the housing market over the last nine months as many other factors remain."
David Whittaker, managing director of Mortgages For Business, echoes the guarded approach to today's figures, saying: "Lets not crack open the champagne just yet. This is the end of the beginning - not the beginning of the end.
"2010 will be characterised by cautious progression. Rates will to go up this year and cuts have to be made to public spending. These will both provide hurdles for the economy to negotiate over the next 12 months."
On the plus side, professional property investors with large cash deposits will see this year as a great opportunity to bolster their portfolios, he says.
In the latest growth estimates, the worst performing sectors of 2009 were manufacturing, contracting by (-)10.8%, and construction, which shrank by (-)10.5%.
The distribution, hotels and restaurants, and Government sector performed best, though still contracted by (-)4.6% and (-)0.8% respectively.
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