The UK economy has exited from its worst recession since 1945 in Q4 2009 according to a leading economic think-tank. The full year slump is expected to be the worst since 1921.

Official data are released later this month, which is expected to show modest growth in the fourth quarter of 2009, after 18 months of contraction.

The economy is forecast to have expanded by 0.3 per cent in Q4 of 2009, according to the National Institute for Economic and Social Research.

In the full year, however, the NIESR says that the slump in GDP (gross domestic product) of 4.8 per cent is the largest annual contraction since 1921.

As the graph above shows, the broader picture of the recession is that output fell sharply for twelve months until March and has not changed very much since then, although evidence of a recovery is starting to emerge.

The think-tank says its track record in producing early estimates of GDP suggests that the  projection for the most recent three-month period has a standard error of 0.1-0.2% point when compared to the first estimate produced by the Office for National Statistics. This comparison can be made only for complete calendar quarters. Outside calendar quarters the figures are less reliable than this and they are also likely to be less accurate in the current disturbed economic circumstances.

On Wednesday official data on UK industrial production for November, showed stronger than expected headline growth of 0.4 per cent for the month.

However, the rise largely reflected a 7.2 per cent jump in output from North Sea oil and gas industries.