Hurrah! It's the worst recession ever

This recession - the longest since records began 55 years ago - is producing winners as well as losers. But which one will you be? asks Harvey Jones

Congratulations, folks, we're living through history. With the economy unexpectedly shrinking 0.4% between July and September, we are now living in the longest recession since records began.

This is the first time UK gross domestic product has shrunk for six consecutive quarters since they started measuring these things in 1955.

The economy has now contracted 5.9% from its peak before the recession, as deep as in the 1980s recession. No wonder some economists have stopped calling it a recession, preferring to use the even gloomier label 'depression'.

This is one of those economic milestones you really don't want to see, but there are some scraps of good news amid the gloom.

Reasons not to be depressed

First, interest rates are likely to stay low for longer, because the Bank of England daren't raise them while the economy is still going backwards. Some have argued they could stay below 2% until 2014.

This is great news for mortgage borrowers on a low-cost tracker or SVR (I should declare an interest here - I'm on an SVR). And as mortgage lenders slowly ease their criteria, it should also be great news for anybody coming to the end of a fixed-rate, or even looking to buy a property.

Unfortunately, it is mixed news for first-time buyers. On the plus side, finance (if you can get it) is likely to remain cheap. But the drawback is that house prices will take longer to return to sane levels, because cheap money will keep propping it up.

First-timers should also be wary of the dangers of getting sucked into the market at these prices, because when interest rates finally do increase, the housing market could face its long-awaited reckoning - and crash.

I'm not saying that will happen, because unlike Cliff D'Arcy and Neil Faulkner, I've given up predicting this insane housing market, but you should prepare yourself for every eventuality.

So, overall, the extended recession offers some good news for homeowners, provided they keep their job, and mixed news for buyers.

Which one are you? Let us know using the comments box below!

Save yourselves!

Lower interest rates will be bad news for savers (of which I'm also one), who must redouble their efforts to find a compelling savings account, because base rate increases won't do it on their own. Thankfully, you can Beat low rates with these top savings accounts.

You can also console yourself that for now at least, inflation remains low, with the consumer prices index (CPI) falling to 1.6% in August, the lowest level for four years. That means the real-term return on a market-leading savings account is slightly better than you think.

Look, I'm just trying to cheer you all up here.

And ironically, cheap money might be good for stock market investors. The FTSE rallied immediately after the figure was announced on Friday.

Another pounding

As if sterling hasn't taken enough of a battering this year, it can now brace itself for further pain to come.

Every time the pound rallies, as it did early last week, a fresh slice of bad news slaps it back down. The extended recession means lower interest rates for longer, which means a weaker pound.

It also means that the Bank of England is likely to extend its experimental in printing money, aka quantitative easing, by at least another £50 billion over the next quarter. That will also drag the pound down.

The pound is pants

A puny pound is good news if you work for a company that makes money from exports or tourists, because foreigners will find your services much cheaper, and hopefully buy more of them, securing your future.

The rest of us should become more entrepreneurial. If you spot a foreigner in the street, don't be shy, sell them something!

The pathetic pound is also good news if you own a property abroad, and are thinking of selling up, because now you'll bring a lot more loot back home.

When £1 was worth $2, a $200,000 property was worth £100,000. With the pound at $1.63, it is worth £122,600. That's an extra £22,600.

Of course it's not such good news if you were thinking of buying abroad...

Don't go drinking in Oslo

If you have a foreign currency mortgage or are retiring overseas on a UK pension, you have good reason to loathe the spineless pound.

Earning money in one currency and spending in another can back you into a nasty little corner, as I have discovered to my cost.

I have a Norwegian girlfriend, and a mortgage in the world's richest petrodemocracy, and my sickly pounds don't last long over there. I was in Oslo three weeks ago, and two pints of Guinness and two packets of crisps cost me £21.

Half the Scandinavians I know are whizzing over to London and spending in our cheap shops and pubs, then flying home marinated. That will also help our economy.

But if you were planning on taking a foreign holiday next year anywhere in the eurozone, well, I hear Dorset is nice.

For the UK economy, the soggy pound is the buffer that has stopped the crash from turning into a train wreck. If we were locked into the mighty euro right now, we would be completely derailed. So that's something.

Brown and out

The recession that never ends is generally bad news, particularly if the latest setback stops nervous consumers from spending and businesses from investing, driving unemployment up even higher. But as you can see, at least there are one or two bright spots.

Finally, it is likely to spell bad news for Gordon Brown, further shrinking his chances of getting re-elected. Some of you might think that is very good news indeed!

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