26 April 2012

UK economy slips back into recession

The UK economy has slipped back into recession, according to initial estimates from the Office for National Statistics (ONS).

Latest figures from the ONS reveal that the economy shrank by 0.2% in the first three months of 2012.

This, coupled with the 0.3% decline in GDP recorded in the fourth quarter of 2011, means the UK is now in its first double-dip recession since 1975.

The construction industry suffered particularly poor growth, falling by 3%, while the output of the production industries decreased by 0.4%

Buoyed by recent surges in petrol sales, growth in the services sector (including retail), increased by 0.1%.

Speaking at Prime Minister’s Questions, David Cameron said the figures were ‘very, very disappointing’.

‘I don't seek to excuse them, I don't seek to try to explain them away,’ he added. ‘There is no complacency at all in this Government in dealing with what is a very tough situation, which frankly has just got tougher.’

However Labour's shadow Chancellor Ed Balls said: ‘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.’

Yet David Kern, chief economist at the British Chambers of Commerce, commented; ‘These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism’.

Experts had previously predicted that the economy will continue to fluctuate this year, while some have warned that the extra bank holiday for the Queen's Diamond Jubilee could have a detrimental impact on growth in the current quarter.

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