Double-dip recession worst for 50 years
The latest official figures reveal that the UK economy contracted by 0.7 per cent in the second quarter of 2012, significantly more than the 0.2 per cent fall in GDP expected by economists.
It is the largest fall in quarterly UK economic outlook since the first three months of 2009 and means that the double-dip recession has extended into a third consecutive quarter.
The figures are a preliminary estimate and may be revised, but if they are confirmed, Britain will be in the longest double-dip recession since quarterly records began in 1955.
Joe Grice, the chief economist at the Office for National Statistics (ONS), said that the additional bank holiday for the diamond jubilee celebrations contributed to the fall, along with the exceptionally wet weather.
He warned that the -0.7 per cent could be revised down, as well as revised up.
The ONS statistics reveal that the service sector contracted by 0.1 per cent, industrial output shrank by 1.3 per cent and construction output fell by 5.2 per cent.
The figures mean that the UK economy is now 0.8 per cent smaller than it was a year ago.
The Chancellor, George Osborne, has blamed the UK’s economic woes on the crisis in the eurozone which has taken a turn for the worse this week.
Spain’s economy is close to meltdown with analysts warning that the country is likely to need aid from International Monetary Fund (IMF).
As a leading member of the IMF, Britain could be involved in a bailout deal.
Spain is reeling under the combined effects of a property crash, a recession and the highest rate of unemployment in Europe.
Other eurozone economies are continue to flounder, with Greece’s economy expected to contract by more than 7 per cent this year and Germany facing the prospect of losing its gold-plated credit rating because of the risk of the crisis spreading.