News In Depth
UK suffers double-dip recession
The UK is back in recession after a surprise 0.2% contraction in the economy in the first quarter of the year, official figures revealed.
The decline in gross domestic product (GDP) was driven by the biggest fall in construction output for three years, while the manufacturing sector failed to return to growth, the Office for National Statistics (ONS) said.
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.
The City had predicted the economy would scrape growth of 0.1% after a 0.3% fall in the previous quarter.
But the current downturn is expected to be nothing like as severe as the previous recession of 2008/09, which spanned more than a year.
The return to recession will heap more pressure on the Government and fuel criticism that Chancellor George Osborne's austerity measures are choking off the recovery.
Economists and business leaders have warned that a technical recession would hit confidence and could cause businesses to rein in spending at a time when they are being encouraged to invest to stimulate growth.
Mr Osborne said: "It's a very tough economic situation. It's taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime - even after the recent fall in unemployment.
"But over many years this country built up massive debts, which we are having to pay off."
He added that the recession in much of the rest of Europe was hampering the recovery, but pledged not to abandon his "credible plan" to cut the budget deficit.
The services sector, which accounts for some 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 0.4%, with manufacturing down 0.1% after a 0.7% decline in the previous quarter.
The continued fall in manufacturing will come as a blow to the Government, which is hoping the sector will lead the recovery.
The construction sector was the biggest contributor to the decline in GDP, with a 3% fall in the quarter, its biggest contraction since the first quarter of 2009.
But economists have 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 ONS's first estimate is done before more than half of the data has been gathered and some economists are hopeful that Wednesday's figure will be revised higher in coming months.
But 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 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."
Bank of England governor Sir Mervyn King recently warned that the economy might "zig-zag" in coming months.
what do you think?
well done Scameron ................hope you are proud of your handy work
oh Keith that is so 2 years ago !. Osborne has been warned time and time again by independant people ifs etc that his policies were toilet and were gonna get him into trouble , so the little turkey wouldn't listen and now its all come true.Ha ha how can it be labours fault that he just threw away 10 billion to europe the other day .Such stupid comments from you.
Hah Ha Orange! I like the picture heading this double dip recession - women walking with umberellas up! As to the main topic, so what? Stay calm and keep on living. Sometimes you can't see your way past Thursday - but Sunday always comes!
Not suprised at the news. The nasty party and the lib dems have only themselves to blame. They give away money and prop up a failing Euro and countries. Had we kept our money perhaps we might have at least avoided this or at best lessen the impact on British people. "you are safe in their hands, NHS and others, promised a referendum over Europe.....got denied. This government has driven this country into the dust. I look forward to the next election not that we voted for this coalition in the first place it was a deal done after the voters had voted and the results declared.
Keep taxing small businesses out of the market place . . . that way you'll get no innovation and growth. Why don't you look at Hong Kongs tax model . . .that was British . . .go speak to Chris Patton. . .he'll give you an economy lesson on growth . . . Tory Boy !
George stop the loan shark bit on handouts latest GBP 10 Billion to Christine Lagare your not going to get it back man!!!! Euro is doomed!!! France and Germany heads of State or call them PM's will roll over and banks will be in melt down face facts for goodness sake. The long long list of overseas Aid and handouts is ENDLESS and Hello your not helping putting US as of today offically Back into recession. Wakey Wakey rich boy!!!!!!
Lets not forget who got us into this mess in the 1st place. Labour!. For Millibore to stand there and say 'Its a disgrace' and keep a straight face is showing his denial of his Party's involvement in the whole thing, Thats the disgrace!!
Labour put the country in debt, but the Coalition is putting its people in debt. Rising prices, more taxation, and wage freezes equates to less spending, but if your a "posh boy" who does'nt know the price of a pint of milk and has been born with a silver spoon in his gob then "FU JACK I'M ALRIGHT" 10 Billion into the Monetry Fund would be better spent on bringing industry back to Britain, and getting out of the EU.
We certainly do need to get out of the EU! But why do people keep forgetting that when Labour got into power last time it was the conservatives that had put the country into debt then, they had even sold our gold reserves!! So it seems Labour just had to try and make the best of a bad situation caused by Cons all the way im afraid!!
From 1963, to 1994 successive Tory and Labour Governments have allowed the Banks to create £655 Billion, out of thin air, as debt, whilst the Governmnet only created £25 billion in coinage and notes So 97% of the total money supply of the UK[M4] was created as counterfeit money. And the National Debt is actually just made up digitial money which should never have been allowed to exist in the first place. [When you ring up a bank, and ask for a lona. The Bank just type that money into existence on their computer. So all new money comes into existence as debt. Therefore, in this perpetual monetary system , debt is infinitely unpayable] The Banking system is pure Evil. And is fixed to benefit a few thousands people at the expense of the rest of us. Britain has always existed this way. Of course the government could have stopped this utterly corrupt fractional reserve banking system, at any time they liked. The Governmnet could have created money debt free. They could and should have put far greater restrictions on banking. Instead they have impoverished generations, and allowed the UK to become a Dictatorship of the Monetary system. Parliament has never had the best interests of the population at heart. We DO NOT live in a democracy. Now they are trying to convince people, with sleight of hand, its just business as usual, and we should be attempting to pay back this debt. Why? Its not my debt. It didnt have to be this way. What should actually be happening, is the 'bought and paid for' corporate Media should try telling the truth, and the majority of the country should be seeking out our local MP's houses with pitchforks, nooses, and flaming brands. AND IM NOT KIDDING EITHER From 1997, in just 15 years the banks have used their power to create money to pump hundreds of billions of pounds into the housing market This has pushed the price of housing out of reach of ordinary people. Generations, are in debt slavery, working for nothing. Unable to pay for a stake in society. completely ignored From the time when the Bank of England was formed in 1694, it took just over 300 years for banks to create the first trillion pounds. It took them only 8 years to create the second trillion. LABOUR/LIB DEM/TORY...DIVIDE AND CONQUER THE MASSES BY OFFERING...FAKE CHOICES FOR FOOLS.
I feel abnadoned by this goverment and the last......... they just dont listen
When it comes to governments, they never listen... Unless it happens to be an election year!
The ONS has told a complete lie. All producers say that things are increasing. The ONS says that employment is reducing but in fact it has increased. The ONS is run by Mervyn King who now wants to do more QE but his MPC are saying NO. So he is now thinking of getting rid of them so he can destroy our economy and pensions by himeself. He states that if inflation rises he will do more QE. and if inflation falls below 2% he will cut the base rate to 0.25% but if it goes up again then the base rate will stay . He is backed by Osbourne and Cameron so now they should all be charged with High Treason
Standby for the Triple Dip, it's certainly on the way but we may all be saved by the new Pasty Tax, this should be a real earner for the government!
Some ridiculous statements on here. The real national debt also includes substantial liabilities in relation to unfunded public sector pensions, unfunded state pensions, the Private Finance Initiative (PFI), Network Rail, nuclear decommissioning and a number of other items. At the end of 2009-10, the real national debt stood at £7.9 trillion, over £300,000 for every single household in Britain. During the last decade, under Labour, the debt has more than tripled, soaring from 230 per cent of GDP (£2.3 trillion) up to 560 per cent of GDP (£7.9 trillion) Also under Labour, the Average House Price TRIPLED in a decade, whilst the median UK wage rose by just £6.5k. Utilities also TRIPLED under Labour, and Council Tax DOUBLED, plus we saw rising inflation in other staples like Food. It was all a giant Ponzi scheme. Basically if you didnt get onto the 'housing ladder' at the appropriate time, and ended up 'priced out' as house prices rose year after year, youve worked for over 13 years hard graft, with nothing to show for it. No Capital. Labour destroyed the country, but the country needs to wake up to the fact that there is no real difference between the parties. As every political philosophy, is fantasy under the present monetary system. The UK is not a democracy. It is a dictatorship of the monetary system by Banks. And both Labour and the Tories will do nothing to change that. Reject all mainstream parties.
Vote UKIP Farage has been predicting this mess for years. Let someone with business know how run our country and not professional politians that have never worked in the real jobs market.
Cheating, lying Clegg and Toff CaMORON running the country in to the ground .They and their banking friends will be O/K, it is us and our children who will pay.
such news dont help at all, just spread more panic... I am in between jobs now, and it actually scares me.
Uk need to get out of the European Union. The European Central Bank is breaking its own rules by creating money to fund Governments in Debt. Vote UKIP
does we told you so Mr Cameron, ring any bells?, you can't keep giving away millions of our money that we do not have, I would really like you to tell me how I create millions out of nothing?
We never ever came out of the First recession........