Britain slips into first double-dip recession since 1970s
26 Apr 2012
With the UK economy shrinking in the first quarter, Britain has slipped into its first double-dip recession since the 1970s, forcing prime minister David Cameron to defend his spending cuts in parliament.
Gross domestic product was down 0.2 per cent from the fourth quarter of 2011, when it fell 0.3 per cent, according to the Office for National Statistics. Two straight quarters of contraction are taken as a recession as per definition.
The fall in GDP from the fourth quarter came from a 3 per cent drop in construction, the most since the first quarter of 2009, coupled with a 0.4 per cent decline in industrial production. Manufacturing also contracted 0.1 per cent while services, the largest part of the economy, grew by 0.1 per cent, on boosted by transport, storage and communication.
With an anti-austerity backlash increasing across Europe, Cameron described the data as ''disappointing'' and pledged to continue supporting growth without letting up on the UK's biggest fiscal squeeze since World War II. The drop in output comes as the Bank of England is in the final month of its latest round of economic stimulus. Meanwhile prospects continue to dim in the euro region, Britain's biggest export market.
According to analysts, this was not supportive of the fiscal consolidation program, and the Bank of England may undertake a final £25 billion of quantitative easing in May.
Bank of England policy maker David Miles pointed out yesterday that today's result was possible. He had said in an interview with Bloomberg News that a negative number ''wouldn't be a great surprise.''
