Fears of a double dip recession
Official statistics reveal the UK economy is now back in recession. Image courtesy of: Copta/sxc.hu
were confirmed today (April 25) as official statistics revealed the UK economy shrunk by 0.2 percent in the first three months of the year.
The contraction was caused by a considerable fall in construction output, according to the Office for National Statistics
, and follows a 0.3 percent contraction in the fourth quarter of 2011. The ONS said that cuts to public spending contributed to the large fall in the construction sector.
A recession as defined as two successive quarters of economic contraction.
Prime Minister David Cameron called the results “very, very disappointing” and said that he “didn’t seek to excuse them in any way” at Prime Minister’s Questions
Despite the disappointing news, the BBC’s Stephanie Flanders said that the underlying reality of economic growth almost matches predictions.
The UK economy was last in recession in 2009, and has struggled to regain momentum since the economic downturn took hold in 2008.
Graeme Leach, chief economist at the Institute of Directors
, told the BBC: "It is clearly not good news, the missing link in the economy has been confidence
But he did echo the ONS’s view that the degree of contraction was limited: "These are relatively small falls, so we shouldn't be too alarmist.”