26th January 2010

COMMENTS FROM ANDREW SMITH - CHIEF ECONOMIST, KPMG on the ONS figures announced today :

"At least it’s stopped going down."

"The data confirm that the recession is technically over – just - but they also confirm that the economy is 6% smaller than it was eighteen months ago. Widespread excess capacity precludes a return to normality anytime soon.

It looks like being a slow haul out of recession anyway. After little better than stabilising in the fourth quarter, the first quarter could also be touch and go as VAT goes back up and consumers look to the coming election and fiscal squeeze. At this rate we risk a double dip recession before the recovery has even got going!

And it is much too early to look for improvement in the labour market. The good news in the recession was that job losses were contained by flexible working arrangements. The bad news in the recovery will be that job creation will lag as existing employees return to more normal working arrangements before businesses need to hire.

To talk to Andrew Smith and for further information contact

Gavin Houlgate

Tel: 0207 694 3902

Mob: 07795 290855

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