Can the UK Chancellor of the Exchequer Avoid a Recession?

by Louise Curley  November 28, 2011

George Osborne, UK's, Chancellor of the Exchequer is scheduled to announce tomorrow a 30 billion pound National Infrastructure Plan and a 20 billion loan guarantee program to boost lending to small business. The programs should help to boost economic activity and perhaps could prevent the downturn that was seeming almost inevitable.

The Confederation of British Industry's (CBI) Distributive Trades Survey reported today that the balance of opinion on the volume of retail sales in November was -19% and was the sixth month in which the balance of opinion has declined.  The CBI's Industrial Trends Survey, released a few days ago; showed that the balance of opinion on the volume of output three months ahead, improved but remained negative.  The balance in November was -8%, up from -11% in October. The balance of opinion on new orders, however, was slightly more negative in November than in October (-19% vs. -18%).  The Hometrack Housing Survey showed that the average price of a house continues to be below year ago prices.  The levels of these indicators, typical of recent economic data, were last seen in the months preceding the last recession as can be seen in the attached chart and in the table below.

United Kingdom	Nov 11	Oct 11	Sep 11	Aug 11	May 08	Apr 08	Mar 08	Feb 08
Year over Year Percent Change
CBI Industrial Survey:  Vol of Output  3mo ahead ( % Bal)	-8	-11	9	13	0	18	11	9
CBI Distributive Trades Survey: Vol of Sales ( % Bal)	-19	-11	-15	-14	-26	1	-3	4
CBI Industrial Survey: Current New Orders( % Bal)	-19	-18	-9	1	-13	7	3	2
Hometrack:  Price of Houses (Y/Y % Chg)	-2	-3	3	-4	-1	0	1	2