After having exited recession only recently, the UK is now ‘on the road to recovery’ – a different story entirely to the one in the US, where the recession ‘unofficially’ ended in the third quarter of last year.

So, with both economies returning to growth, it’s time to take a look back and pick out what actually happened… was the recession in the UK that different to the recession in the US?

Well, to start off with, the US was only in recession for four consecutive quarters (12 months) – which is better than Britain, which remained in recession for a further two consecutive quarters (so 18 months in total), meaning the UK economy was the last major economy to come out of recession (behind Japan, China, France and Germany).

It all started for the US economy when economic growth fell by 0.3% during the third quarter of 2008 – after increasing by 2.8% during the previous three-month period. While for the UK, the economic heartache began when gross domestic product (GDP) fell by 1.5% during the final quarter of 2008. 

Fast forward several quarters of economic uncertainty, and…

In the third quarter of 2009, the US economy posted a better-than-expected annualized growth rate of 3.5% – marking the first positive quarter since Q2 2008. Meanwhile, in the final quarter of 2009, the UK economy posted a weaker-than-expected growth of 0.1% – barely making it out of recession.

Despite the weak economic growth in the UK, Chancellor of the Exchequer Alistair Darling said he was confident that the UK is now “on a path to recovery”.

Over the course of 2009, residents of both countries felt the effects of the recession. In the UK, for example, the number of people declared insolvent reached an eye-watering 134,142 – this was made up of 74,670 bankruptcies, 47,641 IVAs (Individual Voluntary Arrangements)* and 11,831 DROs (Debt Relief Orders)**. While in the US, up until the 30^th September 2009, there were 1,402,816 filings for bankruptcy – this figure included 989,227 chapter 7 filings, 14,745 chapter 11 filings, 487 chapter 12 filings and 398,210 chapter 13 filings.

*An IVA is an alternative to bankruptcy, offering borrowers the chance to clear unmanageable unsecured debts in five years, and have the debt they can’t afford to repay written off.

** A DRO is also an alternative to bankruptcy, and was introduced on April 6^th 2009. It is designed to help people who have very few assets and debts of less than £15,000.

So, now both economies are ‘officially’ out of recession, can we expect things to stay this way?

Although it is hard to predict what may lie ahead for both economies, many experts are expecting a slow recovery from the two countries. This isn’t to say that they won’t dip back into recession though, which is always a possibility when economic growth, particularly in the UK, has been so weak