UK Economy Falls Into Double-Dip Recession
Britain has fallen into a double-dip recession, the first official estimate of economic growth so far this year has shown.
The Office for National Statistics (ONS) said the UK's economy contracted by 0.2% in the first quarter of 2012.
It follows a 0.3% decline in Gross Domestic Product (GDP) in the final three months of 2011.
The preliminary estimate, which may be revised later, means the UK is back in a technical recession - defined as two quarters of decline in a row.
It is the first double-dip recession since 1975, dealing a heavy blow to the coalition Government.
The data confounded market expectations that the economy would grow by 0.1% in the first quarter from January to March.
The ONS said the fall in GDP was driven by the biggest fall in construction output for three years, while the manufacturing sector failed to return to growth.
Chancellor George Osborne told Sky News: "It's clearly disappointing news, I'm not disguising that.
"It reminds us that Britain faces a very tough economic situation because we built up enormous debts over the last decade, we had an unbalanced economy, and our recovery is not helped by the fact that much of Europe is in recession or heading into recession.
"The question being asked at the moment is, should we borrow even more or spend even more in some discretionary way in the middle of a debt crisis?
"I think the British people understand that that's not right."
Prime Minister David Cameron also defended the Government's economic plans in the Commons on Wednesday.
But TUC general secretary Brendan Barber urged the Government to change its course.
"Austerity isn't working.
"The Government should look across the Atlantic and follow President Obama's alternative that has reduced unemployment and brought growth back to the USA."
Labour's shadow chancellor Ed Balls added: "We consistently warned that their austerity plan was self-defeating and that cutting spending and raising taxes too far and too fast would badly backfire.
"David Cameron and George Osborne arrogantly and complacently dismissed people who warned of the risk of a double-dip recession and the country is now paying a very heavy price.
"Their economic credibility is now in tatters."
The current downturn, however, is not expected to be anything like as severe as the recession of 2008/09, which spanned more than a year.
According to the latest ONS figures, the services sector, which accounts for three-quarters of the economy, saw growth of 0.1% in the quarter, after a decline of 0.1% in the final quarter of 2011.
Retail sales were boosted last month by panic-buying of petrol amid fears of a tanker drivers' strike and a heatwave encouraged people to buy summer clothes.
But the industrial production sector declined by 0.4%, with manufacturing down 0.1% after a 0.7% decline in the previous quarter.
The continued fall in manufacturing will also come as a blow to the Government, which is hoping the sector will lead the recovery.
However, economists and business leaders said the ONS's reading of the economy may be too gloomy, as recent industry surveys for both the manufacturing and construction sectors have pointed to growth.
Chris Williamson, chief economist at Markit, said: "The underlying strength of the economy is probably much more robust than these data suggest.
"The danger is that these gloomy data deliver a fatal blow to the fragile revival of consumer and business confidence seen so far this year, harming the recovery and even sending the country back into a real recession."
The CBI added: "This disappointing news comes as a surprise, business confidence has improved since the turn of the year."
The ONS's first estimate is also done before more than half of the data has been gathered, giving hope that the latest figure will be revised higher in coming months.
The influential Ernst & Young Item Club said it would be "very surprised if GDP figures were not revised upwards substantially".
Nevertheless, economists warn that the economy will continue to struggle amid stubbornly high inflation and rising unemployment, while confidence and exports will be hampered by the eurozone debt crisis.
There are fears that the extra bank holiday for the Queen's Diamond Jubilee will hit the current quarter, and it is not known what impact the London Olympics will have in the summer.
Vicky Redwood, chief UK economist at Capital Economics, said even without the fall in construction, "output would have done no better than stagnate" and forecast that GDP will contract by about 0.5% this year.
She said: "The main disappointment was the meagre 0.1% rise in services output - the surveys had pointed to services growth of 0.5% or more.
"Even if the underlying picture is stronger than the official GDP figures show, there is no guarantee that the recent pick-up will continue."
The Institute of Directors said the news meant companies "are less likely to boost investment and recruitment this year".
what do you think?
don't need figures to tell us what we all ready know.Especially the the ones from Scamerons institute for cooked up up figures.!
well looks like i was right the figures are out and they can't deny it they've sent us backwards .Can't wait to hear their excuses this time.
I think we all know Lib/Lab/Con economics by now " Economic expansion is inversely proportional to industrial decline "
This country has been in a recession since I started reading newspapers in 1980. I don't remember any real economic booms. How long is that? 2012 - 1980? 32 years and it's exactly the same now? ...
Well, that's an interesting way of looking at it... One long 32 year recession punctuated by blips of economic boom!
What a mess. This govt seem to stagger from crisis to crisis. With people being squeezed in the way that they are who is going to spend the money to get us out of it. My worry is what is the alternative ? More of the clowns who got us into the last mess .
Do u mean the bankers? It was them, after all, that got the WORLD into the financial mess it is in.
If everyone stopped spending beyond their means and never get into debt this country would be a far better place to live but while we have those who have most and keep getting more, not helping those who have least and keep getting less this country will always be the dosshole it has been since I was born. Policiticians need a reality check. Maybe we need a cabinet of working class people and not those educated at the private schools and universities.
We seem to be too fond of selling all our manufacturing industries to overseas owners. We may keep some jobs, but we lose the economic benefit.
RECESSION.get this gov of there ass and clear out the biggest waste of money in this country ,,,,(LONDON) 2 million imagrants with no rights to stay here costing us billions a year,putting them up in houses where the rent is 2000£ a month paid by the rest of britain,,and half the houses owened there are by people how came here and signed on ,,, its the easiest place on this planet to get money ,walk in of the street sign on tell lies get 26.000£ a year without paying 1 penny tax in your life,.london does not make this country any money it costs us all money and the rest of britain suffer,as we are the money makers,have a clear out of not just london but britain,and we would be a stable country,,,, employ people to rout out the illeagles and fraudsters and start deporting the lot out or jail them, country sorted
I think I understand what you are struggling to say, Mr Rankin. But you forgot to mention education!
Immigrants have not brought this country to its knees. The fraudsters in the fnance sector and the rich bankers have done this, all set up by the corrupt political class who remove all financial restrictions from Thatcher to Major, Blair, Brown and now Cameron. They're the ones you should be blaming. Or are you just racist? Two million illegals, my eye.
hmm bit of panic buying a month before figures are released nice cash injection!! simple figure ,squeeze population as much as possible equals they cannot spend,increase revenue stream ie dail need stuff equals people cut back,end result shrinking economy,prop up banks finacial parts ,because a few hundred people screwed up a few million and a generation will suffer,untill lower mid class are able to spend ,your stuck on a merry go round,plus do not forget mass immigration that arrived with hands held out,now watch the hands that feed the coffers and the ones who lost there jobs houses etc start to turn,saw this coming 5 yrs years ago
If you were going on a rollercoaster ride and you were told it was a 'double-dip', you'd probably think great, I'm going to enjoy this! Apply it to the economy, take away the thrills and you have the 'Tory Double-Dipper'! When Labour left office in 2010, the economy was growing and unemployment was falling... FACT! One thing for is for sure, the last two years and this downward curve the economy is now in, is a direct result of Tory mismanagement of the economy. Well done George, you've taken the country back into recession! Hold on tight everyone and welcome to the 'Tory Double-Dipper!! This one is nothing to do with Labour.
torys have told us Austerity = Growth, .....Ah so i guess that would be why we have gone into reccession then after 2 yrs of austerity......This government has zipo direction, and makes things up as it stumbles along.....i used to think dave was ok for a tory, i still think he is in a way.....but he aint got a clue what hes doing.....TORYS OUT
Windows Live User
By the time 2015 arrives the Condems will have ruined this as a country to live in, especially for pensioners Hope someone takes action before then
Dave knows exactly what he is doing, the same as all our governments have been doing for decades, leading us to accept a lower standard of living in order to raise that of China and Africa. Read up on " The Bilderburgers ".
wake up uk we were never out of reccesion
That so George, better get that 10 billion loan back from Christine's handbag don't you think. And start keeping a check list on handouts you are giving away on aid clarity begins at home Old boy.
This country is so depressing
Looks like super rich out of touch arrogant cameron and osbourne are going to have to steal from the pensioners again
Windows Live User
I certainly hope not or my families money is going under the bed, plus we may move abroad
Two years into this government and Calamity Calamity is still blaming Labour How is it that we are still borrowing more now than we did two years a go
well what are you gonna blame it on this time Georgy boy.?? The weather.no done that err the wedding err no done that .Well lets just stick with its all Labours fault untill we can think of one.This lot of clowns are a joke and a poor excuse for one at that.
Why is my legitimate reply comment being censored?
This is just part of the rocky road that the coalition warned us about when they took over the massive debt left by from Liebour, all in all the coalition are doing the bset they can with the empty cupboard & deep debt that liebour left. 0.2% is nothing in reality & give things until about a year before the next election & the economy will be great again, the coaltion dont mind all the bad stuff coming out now because it will be forgotton about by then. The good thing is intrest rates will remain low for ages now these figures have come out, helping businesses & young familes with tracker mortgages, happy days !!
Grant, I see you're trying to put a brave face on! Full marks for effort, but this 'Tory Double-Dipper' is entirely of Boy-George Osborne's making... The incompetent numpty that couldn't run a piggy bank let alone an economy!!