UK economy likely to avoid Japanese-style 'lost decade'

The swift and extensive actions of the Bank of England to deal with the UK's current financial crisis means the UK has a good chance of avoiding the protracted period of economic stagnation that hurt Japan in the early 1990s

Having (skillfully?) avoided the downturn that afflicted most of the industrialised world at the start of the new millennium, the UK economy is in its first recession since the early 1990s. True, the technical definition of two successive quarters of declining national income has not yet been satisfied - growth having been flat in Q2 before contracting 0.5% in Q3 - but there can be little doubt that economic activity will have fallen further in Q4 and will continue to weaken through the first half of 2009. But what lies in store after that? Will normal service then be resumed or are we on t...