Why is the UK still in recession when the U.S. isn’t?

November 3, 2009

Recent U.S.  gross domestic product data show the world’s biggest economy emerged from recession in the third quarter, while in the UK data show that in the same period Britain’s economy contracted.

British economist and author John Kay theorizes that Britain is mired in its worst recession on record in part because government support has not been evenly distributed across sectors.

“We’ve poured money into the financial sector — by and large the financial sector in Britain is doing OK,” he said.  “But very little of that is getting through to small and medium-size businesses out there in the rest of the economy.”


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Who said the US is not in recession? Jobs are still being cut.

People are being evicted from their homes. The banking/business sector got all of the money that was supposed to help the citizens stay afloat while the “survival of the fittest” philosophy our merchant tyrants have been touting for little more than a decade shaped the business/banking sector.

Instead our elected “representatives” decided to run to the rescue of those that line their pockets while leaving the citizens to fend for themselves. What rubbish.

Both the United States AND Britain should have bailed out their citizens instead of kissing the asses of bankers.

People are angry and distrustful of government and business because they both screwed their people for profit. A prostitute on street the shows more honor and care for the client than the corporate whores that have raped our two nations. At least the “John” is happy when it’s over.

Posted by Benny Acosta | Report as abusive

Seems ironic since Gordon Brown led the global stimulus/Keynsian economic policy charge.

Posted by Londonia | Report as abusive

Countries differ. It would be unrealistic to expect all countries to march in lockstep. For example, I still do a double take every time I hear someone here refer to the “last recession in 1990″ – as someone whose customers were mostly overseas, I struggle to remember that in here the UK the tech crash did not infect the wider economy as it did elsewhere.

As to small businesses, it’s difficult – clearly some of them will have been given credit they shouldn’t have been given in the first place, and will now have to go to the wall. Giving government largesse to them would merely postpone the day of reckoning. On the other hand, it’s probably at least partly true that the banks no longer have enough people who can accurately assess the creditworthiness of small businesses who want loans. So some babies are likely to be thrown out with the bathwater.

Posted by Ian Kemmish | Report as abusive

I travel all over the UK on business and the majority of comments I hear is one of a total lack of confidence in this Goverment and especially Gordon Brown.

We all know that a General Election has to be called in 2010 but until then this lack of confidence and uncertainty I believe, is set to continue compounded by the utter futile and tradgic waste of money and lives in Afganistan no matter the utterences from our politicians about the ‘security of the UK’. No one believes them.

Posted by malcolm davis | Report as abusive

Benny pretty much has it right, whether you call it a recession or whatever the bottomline is the economy here in the US is a complete disaster. Nothing is being improved, think about when you hear executives or accountants give you a pile of b-s when they point out one insignificant number on the balance sheet to try and make you feel better about the entire company, that’s the same thing we have here except the execs and accountants are our politicians and the tyrants running the federal reserve.

Posted by Michael Ham | Report as abusive

I agree with your assessment in particular the last point. Since Basel Accord I in 1992, the Investment Bankers have been given the upper hand while the Credit Managers have been beaten up. A good Credit Manager looks into the inner working of the company to make assessment. Investment Bankers look at published balance sheet and annual reports for information which lag behind reality for half a year. It is this lost of value of Credit Assessment that is the primary cause of the crisis. Securitization and derivatives are just technicalities. It takes time to build up this value again.

Posted by Lee Siu Hoi | Report as abusive

Like Ian I was not affected by the last recession even though I spent the whole of the nineties selling computer peripherals. This one is something else. An interesting fact I heard today was that small businesses in the UK are responsible for creating over 50% of the nation’s GDP! But look how they have been treated. Commercial business rates and rents have been going up fast regardless of the glut in premises. No wonder they need loans. Everything is about supporting the banks and only the banks.

Posted by C Davies | Report as abusive

Joe Public need to be much more political. Its up to us to tell the Government what we want. So, they gave money to the banks who have been hoarding it,surprise surprise, well now we the public want all stealth taxes halved, like Road tax, TV Licenses, Community charges, until we are out of this mess. All standing charges on utility bills should be abolished until we recover also. I dont want to hear that BBC Exec’s are not going to have a pay rise or MOD staff wont all get a bonus. Lets request action that directly effects me & you. Like cuts in our bills, let those big government depts feel some of the pain. We can’t afford to be in Afghanistan so lets leave, there’s a saving of lives and money! In the UK we are just being fed rhetoric, its time we took a stand and woke up – the politicians dont care if it drags on as long as it does not effect their pocket, so lets halve their wages too!!! Maybe then a solution would magically materialise.

Posted by Ann | Report as abusive

I agree with Benny and Michael.

Let’s rather dub it the ‘Great Resuscitation’.

The UK has reserves to fall back on and is sitting pretty with the Pound.

A comparison with other G20 countries could be revealing.

Posted by Casper | Report as abusive

When I get old… okay, older, I wouldn’t mind getting paid to go on TV making indistinct noises about this U.S. economy being not so bad, really–

Hold it. Strike that. Maybe it’s just me but no, I couldn’t. Not at any age.

Posted by The Bell | Report as abusive