Four Ways to Pull an Economy Out of Recession

Germany has clawed its way out of recession. France is growing again. The United States is starting to expand. Even Ireland, one of the countries worst hit by the credit crunch, isn’t contracting anymore.

And yet the U.K. economy keeps on getting smaller. Last week, the government said gross domestic product dropped 0.4 percent in the third quarter. Expectations that Britain would join most of the rest of the world in staging a modest recovery turned out to be misplaced.

At this rate, even Iceland will pull out of recession before the U.K. does.

Prime Minister Gordon Brown keeps boasting he has the right policies to guide the country out of the woods. The truth is that they aren’t working and they won’t anytime soon.

Before it can recover, the U.K. needs a 180-degree change in direction. It must curb the budget deficit, support the pound, stop printing money, and cut taxes.

This is now the longest recession since records began in 1955. While the rest of the world recovers, the U.K. hasn’t. There is no sign of life in manufacturing, nor much in retail or services. The pound edges closer to parity with the euro every week: When it does, expect it to go into freefall.