UK economy in sharpest contraction since 1958
Official figures have today revealed that the UK economy shrank by 2.4% in the first three months of 2009 – far worse than expected and the biggest quarterly decline in 51 years.
The Office for National Statistics (ONS) said the fall was worse than the earlier estimate of a 1.9% fall – and was worse than analysts had expected.
The revised fall was primarily blamed on weaker output in the construction and services sectors.
The ONS said the recession has now been running for a whole year.
Meanwhile, the ONS said that the UK economy contracted 4.9% during the first three months of the year 2009 compared with the first quarter of last year – the largest year-on-year fall ever recorded.
Today’s data will also come as a shock after many reports have been showing signs of stability within the UK economy.
Many respected business organisations have been predicting that the worst of the recession is over.
The figures will also be a shock to Chancellor Alistair Darling who forecast a 1.6% contraction in the UK economy during the first three months of the year, in his April Budget.
Also in the April Budget, the Treasury forecast that the UK economy will shrink by 3.5% this year but despite today’s figures from the ONS, the Chief Secretary to the Treasury, Liam Byrne, said it would not be revising its forecast.
Finally, today’s news triggered a fall in sterling which declined to around $1.6605 against the US dollar.