Britain is now suffering the indignity of being the last economy in the G20 to still be in recession – all the others managed to register some sort of growth in the third quarter of the year.
One of the clearest indications that the recession is over in the world’s largest economy came on Friday, when figures showed US non-farm payroll employment fell by only 11,000 in November, far less than expected and the smallest rise since the recession began in late 2007.
The US with its sub-prime mortgages led the world into recession and there are now growing hopes that it will become part of the recovery stories, joining countries like China, India and Australia in putting the world back on an even keel.
China, as a result of a big fiscal stimulus by the government, appears to be growing robustly again and is helping suck in raw materials from other countries in the region and machine tools from countries like Germany.
Japan, the second-largest economy, has also pulled out of recession on the back of an export recovery, although revised figures next week are expected to show third-quarter growth was slower than expected. But deflation is an ever-present danger and the central bank is likely to hold interest rates at zero for a long time.
Such has been the turnaround in Australia that its central bank last week raised interest rates for the third month running, to 3.75%. Australia also enjoyed a big fiscal stimulus because its government had gone into the slowdown sitting on a healthy budget surplus. And its banking system was more tightly regulated than Britain’s.
Closer to home, both Germany and France – the two biggest economies in the eurozone – started to grow again in the second quarter. Christine Lagarde, the French finance minister, said recently that France had benefited from having a smaller financial system than Britain’s and from having concentrated fiscal support on the poorest families and infrastructure projects, rather than a VAT cut like Britain.
Figures out on Thursday, though, showed unemployment in France rose to 9.5% in the third quarter of the year, still well ahead of Britain’s jobless rate of 7.8%.
The German economy has been helped by strong export demand although domestic consumer spending has remained very slack because of high unemployment. There was, though, better news on the jobs front last week as the jobless total unexpectedly fell by 7,000 last month, although the rate remained at 8.1% of the workforce.
The 16-nation eurozone as a whole exited recession in the third quarter, growing by 0.4% thanks to a rebound in inventories and exports, although weak consumer spending and a drop in investment showed the recovery remains fragile.