Friday is set to be the day economic growth died.
After months of speculation, doom mongering, comment and hope against hope, the figures are in and the recession is on its way.
Figures released today are expected to show the economy shrinking for the first time since 1992, despite surprisingly resilient results from the mortgage and retail markets.
On Wednesday, Gordon Brown joined Mervyn King, the Governor of the Bank of England, in daring to utter the dreaded ‘R’ word in public.
And Mark Harrison, professor of economics at Warwick University, said the only up side was that things are not as bad as the Great Depression.
Speaking about the expectations that the UK will have seen its first quarter of negative growth since the 1990s, Prof Harrison said: “I can’t actually give you a more informed view than you can get from the numbers – the numbers speak for themselves.
“My guess is that things are going to go down a bit because people have been living beyond their means for quite a while based on the equity out of the inflated values of their homes.”
He said businesses would be likely to bear the brunt of the financial downturn, suffering from reduced access to funding as wary banks clamp down on their lending.
But he added there would be no respite for the man on the street either, and that people would “suffer” while the contracting economy cramped their lifestyles. And the Government would find it hard to deal with a monetary problem through monetary policy, he went on.
“My guess has to be that there is going to be a sharp slowdown, but how long its going to be is anyone’s guess,” he said.
“The notorious thing about monetary policies trying to get the economy going again after a recession is that it’s like pushing on a piece of string.”
Meanwhile, as the country slipped into negative growth, some sectors continued to show flickers of life.
There were some encouraging signs in the mortgage and retail markets as the overall economy continued to deteriorate.
The British Bankers Association said the number of mortgages approved had improved in September for the first time in months, although it was still significantly below the 2007 level.
A total of 23,422 loans for house purchase were approved during the month, 10 per cent more than in August, when numbers slumped to a new record low.
And the National Association of Estate Agents said the housing market was showing early signs of improving, with sales rising and first-time buyers resuming their search for a home.
The average number of sales made by estate agents increased for the first time since January during September, rising from five to six.
The rise in activity came after the housing market stalled during August as potential buyers put moving plans on hold amid rumours that the Government was planning to suspend stamp duty.
On the high street, retail sales continued to defy expectations, even though the annual rate of growth fell to its weakest level in more than two years.
UK retail sales declined by 0.4 per cent in September. But economists had been expecting a fall of as much as one per cent, and had also been surprised by figures for July and August when retail sales rose slowly.
But despite the unexpected resilience, firms were still warned to expect a bleak Christmas.
Ross Walker, economist for the Royal Bank of Scotland, said worse was to come for retailers.
He said: “Overall, retail sales have continued to prove a little more resilient than expected, but the more formidable challenge – stemming from accelerating unemployment – is still to come.”
But Prof Harrison said that while any signs of life in the market were to be encouraged, they did not make any difference to the overall picture.
“These are two signals among many,” he said. “The fact that they are the most recent signals doesn’t mean they’re the best.
“A lot of these things are just random variations, they go up and down for a lot of reasons.
“Given all the things that have come and all the things that are going to come around the world my guess is that this is just a random blip.”
