Hopes grow for UK economic recovery

Positive economic figures yesterday added to hopes that the harshest economic slowdown for many decades may now be near its end.

Official numbers showed that factories and utilities in the UK upped their output by 0.5 per cent in June, the strongest performance since October 2007. Halifax announced that house prices rose 1.1 per cent in the month, for their second positive showing in the last three months. And the purchasing managers' survey of services improved for the third month in a row.

Indicators like the stock market and currency markets have been suggesting for some time that Britain might be turning the corner, with the FTSE-100 index up by a third since its March lows and the pound at a nine-month high against the dollar.

And pundits are now queueing up to predict a recovery, with the Royal Institution of Chartered Surveyors (RICS) now expecting house prices to rise this year after previously expecting a 10 to 15 per cent decline. And the National Institute for Economic and Social Research, too, said it now believes "the period of sharp recession is over".

However some still think there may be trouble ahead. The RICS is worried that this year's improvement in the housing market will be followed by renewed problems in 2010 as more homes are put up for sale. And there are others who point to rising interest rates and increasing unemployment as reasons for continued concern. Analysts, too, are divided over whether the Bank of England should continue to print money. As early as today the BoE could announce an end to its quantitative easing programme.

WHAT THEY ARE SAYING:David Wighton, the Times: Much can still go wrong. A large element of the resurgence comes from a move by companies to rebuild stocks run down drastically in the depths of the slump. That boost will eventually peter out. Certainly, the battle to secure a return to truly sustainable, healthy growth still lies ahead. But it seems pretty safe to say we are at or very near the bottom.

Edmund Conway, the Daily Telegraph: The year is 2010. The Tories have won the general election and the stage is set for the long road to recovery. As David Cameron and George Osborne huddle in Downing Street, an adviser enters with baleful news. One of the country's few remaining banks is hours from collapse; others threaten to fall in its wake. The financial crisis has returned. ·