Over the past few weeks many industry officials and groups were convinced that Britain was at last coming out of the other side of the recession. It was widely expected that official third quarter figures would show that there had been an increase in economic output and that the nation would officially be out of recession.

However, when figures were actually released recently they showed that in fact Britain had once again seen economic output shrink, placing the nation firmly in the longest recession on record.

To make matters worse many other major economies have come out of recession, leaving Britain lagging behind as it struggles to free itself from the tangled net of recession. Even the United States has recently revealed that its recession is now officially over, but in Britain all that consumers and officials can do is wait in the hope that the end of the year will bring better news.

The Prime Minister Gordon Brown made a recent speech via podcast where he made a bold and ambitious promise to ensure that Britain was out of the recession by the end of this year.

He outlined some of the measures that he was proposing to help make this happen, but his promise has been met with severe scepticism by many industry groups and individuals, who are now convinced that the economic output in Britain will continue to fall, at least for the remainder of this year.

The desperation of the government to try and revive the economy is obvious and can be seen in some of the measures that it has been taking. For example, a decision has been made to keep the base interest rate on hold at its all time low of just 0.5 percent for the eighth month in a row.

Even more surprising was the decision of the Bank of England to extend the quantitative easing programme by a further £25 billion, which means that the total amount spent via quantitative easing now comes to £200 billion as opposed to the £150 billion that had initially been proposed.

In order to get permission to allocate the additional £25 billion the governor of the Bank of England, Mervyn King, had to write to the Chancellor, Alistair Darling. In his letter the governor stated: “Households have reduced their spending substantially and business investment has fallen especially sharply. A number of indicators of spending and confidence, however, suggest that a pickup in economic activity may soon be evident.”

After hearing about the shock figures regarding economic growth the chancellor, Alistair Darling, said: ‘I’ve always been clear that growth will return at the turn of year, as my Budget forecast confirmed. We’re facing the worst global financial crisis and recession in 60 years. We’ve always said that we remain cautious as a result of the high degree of economic uncertainty.’

As a result of the shrinking economy some had expected an addition £50 billion to be allocated to quantitative easing, although many had expected no extension at all.

Prior to the announcement of the £25 billion extension one official said: ‘Worryingly from sterling’s perspective is the fact that the UK may be the only major economy to have contracted in the third quarter of this year. This clearly suggests that the likelihood of an expansion in QE by £50bn or so over the next quarter is rising, although is not a forgone conclusion.’

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