Economic growth 'weakest since the war'

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The Independent Online

Britain has experienced its weakest period of economic expansion for any decade since the war, analysis showed today.

Gross domestic product rose on average by 1.7 per cent annually in real terms, while the 'noughties' also delivered the worst returns for investors than any decade since the 1930s, the Financial Times said.

The sluggish performance contrasts with the 1960s, when output rose by an average of 3.1 per cent a year. It also took place against a backdrop of a rising population, a factor that tends to boost output rather than shrink it.

Manufacturing was particularly hard hit as on average, after adjusting for inflation, output contracted over the decade by 1.2 per cent annually. That is much worse than the 1970s and 1980s, when output grew 0.6 per cent and 1 per cent respectively.

In the West Midlands, which is home to much of Britain's manufacturing base, average annual GDP growth nearly halved from 2 per cent in the 1990s to 1.1 per cent in the following decade. The south east has also suffered, with growth falling from an annual rate of 3.2 per cent in the 1990s to 1.8 per cent.

The services sector fared less poorly, with annual output in the past decade at 2.6 per cent, only slightly weaker than the 3 per cent seen in the 1990s peak.

The findings published by the Financial Times are based on information provided by the Office for National Statistics.

Hampered by its heavy reliance on a now-crippled financial sector, Britain has just recorded six consecutive quarters of contraction, a slump costing 6 per cent of the nation's economic output.

At the worst point of the recession in the first three months of this year, output fell 2.5 per cent - the fastest rate in more than 50 years.

And while markets expect a return to growth in the current quarter, there are fears of a "double-dip" next year amid looming tax rises and spending cuts.

The weak economic picture was mirrored in the wider stock market as the FT said the decade delivered annual returns of minus 1.8 per cent on average. Investors had not lost money over a decade since the Great Depression of the 1930s.