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UK recession deeper than first estimated

The UK economy contracted by 0.3% in the first three months of 2012.

 
UK recession deeper than first estimated

The UK economy contracted even more than first estimated in the first three months of 2012, with revised GDP figures showing a decline of 0.3%.

Data from the Office for National Statistics (ONS) confirm that the UK entered a double-dip recession, having also contracted by 0.3% in the last three months of 2011.

The first reading of GDP for the first quarter of the year had indicated -0.2% growth, but this figure was much disputed by economists, who pointed to more upbeat business survey data.

Two consecutive quarters of negative growth meet the technical definition of recession.

The economic weakness will add fuel to the debate about the extent of the Coalition government's ongoing austerity measures. However, the publication from the ONS today showed that government spending increased by 1.6% in the first quarter of 2012, compared with an increase of 0.5% in the previous three months, raising questions about the extent of chancellor George Osborne's cost-cutting drive.

The figures also provide more justification for the Bank of England to extend its quantitative easing programme amid falling inflation. At its last meeting in May the Bank's monetary policy committee voted against further bond purchases, but the programme could be extended beyond £325 billion in the future.

Economists expect a return to economic growth in the second half of the year, but this is dependent on events in the eurozone where a slew of negative data today has raised concerns about the weakness of the bloc. The loss of a working day due to the Queen’s Diamond Jubilee will also constrain growth.

The ONS often changes its GDP figures in subsequent revisions. It warned today: 'Expectations of accuracy and reliability in early estimates are often too high.'

5 comments so far. Why not have your say?

Jonathan

May 24, 2012 at 14:24

UK recession deeper than first estimated and share prices are up

report this

LANDLORD X

May 24, 2012 at 15:08

How can there be austerity if the public sector is booming?

All talk of austerity is a bare-faced lie

Headline should read: Government booms whilst private sector economy tanks

report this

William Bishop

May 24, 2012 at 18:57

The difference between a 0.2% quarterly decline anad a 0.3% one is peanuts!

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John Osborne

May 24, 2012 at 20:00

William,

Good point. But the labour party will still use it as propaganda for their wish to make UK even more indebted, even though their policies if they had been elected would have been very similar because of international constraints.

In an idealistic world, the economic situation is so serious that if we had constructive responsible opposition acting for the good of UK rather than their union masters then they would do all they can to cooperate, but no, all we get is milliband and balls behaving like irresponsible spoilt schoolboys, using the old dirty tactics of spite and envy, referring to cameron's background, calling him flashman etc., when he reacts, and opposing every policy on principle even though many came from them previously. This is not what we expect from one of the main political parties.

But then perhaps this is hardly surprising looking at the people involved. One knifed his own brother in the back to gain labour leadership on union block vote, and the other (Balls) was Browns economic advisor responsible for many of UK present economic troubles, but is still there as shadow chancellor.

report this

J Thomas

May 24, 2012 at 22:05

And we managed this with an extra day in the first quarter.

Could the next Govt Minister who seeks to excuse weak GDP figures on the Queens Jubilee holiday in june be reminded that the Feb 29th leap year has never been mentioned by the ONS?

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