Fraser of Allander Institute: Economic Commentary [June 2009]

The recession in the UK economy may be over. The National Institute for Economic and Social Research in London called the end of the recession as occurring in March and is estimating small positive growth in April and May of this year. Due to lack of data the position in Scotland is much less clear. There is a clear danger of a “false dawn”, since it is not unknown for previous UK recessions to have one or two positive quarters of growth before growth turned negative again. Nevertheless, to the extent that the slowdown in economic activity is moderating and may be past its turning point, three reasons are offered for the turn round: re-stocking after considerable stock run-downs, short-time working and temporary plant closures from late 2008; a more price competitive UK economy due to the 20% fall in the value of sterling since the summer of 2007; and the effect of the significant policy stimulus through monetary and fiscal injections.