Government statistics show the UK is officially in recession

The statistics published today show that the UK’s gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter.

This means that the widely accepted definition of a recession – two consecutive quarters of falling economic growth – has been met.

It represents the biggest quarter-on-quarter decline since 1980, and a 1.8% fall on the same quarter a year ago.

Rodney Steel, chief executive of the British Contract Manufacturers and Packers Association, told Packaging News that the recession is bad news for industry, but compared to most contract packers are in good shape.

“Our members are doing pretty well because brand owners are still sub-contracting out new projects instead of having to invest in new kit,” Steel said.

“And the exchange rate means that work is coming back to the UK because the price differential of doing it it overseas isn’t as attractive and it doesn’t have to be shipped to the UK, therefore companies can react to customer demand quickly in this volatile market.”

Meanwhile, Dick Searle, chief executive of the Packaging Federation, said: “The key is consumer confidence. Consumers drive demand but the government doesn’t seem to recognise that. They have to get the housing market going again because that drives consumer demand.”

However, Searle added that packaging companies are still performing reasonably well because “people are still eating and drinking”.

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