UK economy back in recession
Provisional figures from the Office for National Statistics (ONS) show that the UK economy has contracted for two consecutive quarters, which means it has fallen back into recession.
The economy shrank by 0.3% in the fourth quarter of 2011 and the latest figures show a contraction of 0.2% in the first three months of 2012 after construction output fell sharply.
Production output fell by 0.4% and construction decreased by 3%, but there was slight growth, of 0.1%, in the service sector.
The ONS figures are estimated and could be revised in the coming months.
There was better news for the government yesterday with borrowing totalling £126bn in 2011-12, meeting targets.
This represents a significant decrease from £137bn in 2010-11, and from the record £159bn of borrowing under the Labour government.
However, there was a significant increase in borrowing to £18.2bn in March and an increase in the national debt to just over £1 trillion.
There is concern that borrowing may fall at a slower rate than anticipated in 2012 because of ongoing economic weakness and today’s news of a likely double-dip recession will reinforce these concerns.
Following the latest recession news the TUC’s General Secretary Brendan Barber released a statement suggesting the government’s austerity measures are not working.
“The government should look across the Atlantic and follow President Obama’s alternative that has reduced unemployment and brought growth back to the USA,” the statement said.
However the government said it was sticking to its austerity plan, despite the GDP figures.
An official spokesman for the Prime Minister David Cameron said: “The figures out this morning are disappointing but it is taking longer to recover, partly because we have suffered from the biggest debt crisis in our lifetime and partly because of what is happening elsewhere in the world, and in particular in Europe.
“The one thing that would make the situation even worse would be to abandon our plan and deliberately add more borrowing and add to debt.”