25.04.12
Double-dip recession for UK
The UK economy is officially in a double-dip recession, according to figures from the ONS. The economy shrank by 0.2% in the first three months of 2012, mainly due to a sharp fall in construction output.
A recession is defined by two consecutive quarters of contraction, and the latest figures follow the 0.3% contraction for the fourth quarter of 2011. The estimate is subject to further revision in the coming months.
The ONS said output of the production industries decreased by 0.4%, construction decreased by 3%, and output of the service sector increased by 0.1%.
“It is clearly not good news, the missing link in the economy has been confidence,” said Graeme Leach, chief economist at theInstituteofDirectors. “These are relatively small falls, so we shouldn’t be too alarmist.
“[But] regardless of the figures, it is the message that comes out to business - to be cautious - exactly when we want them to be a little more aggressive in terms of recruitment and investment.”
The current downturn is expected to be far less severe than the recession of 2009. Chancellor George Osborne has stated his commitment to the plan to cut the deficit, despite criticism that this will make recovery more difficult.
He 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.”
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