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UK in double dip recession

The UK is back in recession after Q1 2012 data from the Office for National Statistics shows a 0.2% drop in GDP.

It is the second quarter in a row that output has fallen after dropping 0.3% in Q4 2011.

It is a hammer blow to chancellor George Osborne’s economic plans after he predicted the UK would avoid recession in last month’s Budget.

The construction sector saw a devastating collapse in output of 3% after a 0.2% fall in the last quarter.

While the rate of decline in the production industries slowed by decreasing 0.4% in Q1 2012, following a drop of 1.3% in Q4 2011.

The service industries remained static increasing 0.1% after falling by the same level the previous quarter.

Eric Stoclet, chief executive for Crown Mortgage Management, says the economy going into a recession is not a surprise to most people.

He says: “With inflation stuck well above wage growth, most consumers are losing purchasing power by the day. If one adds to that consumer deleveraging both by choice and through lack of sources of credit, a consumer led recovery is not very likely.

“In the current environment with public and private sector and the consumer eager to cut their debt levels, finding the elixir of recovery is going to be tricky. Keynesian advocates would argue for more government investment in infrastructure but that as well is not forthcoming.”

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  • Edward Riordan 26th April 2012 at 10:22 am

    Looks like all the fuss the government caused about the fuel strike last month making everyone panic buy at the pumps did not have the desired effect.

  • Tom Cleary 25th April 2012 at 4:00 pm

    I actually don’t believe that we are in recession. Try parking at Bluewater, Lakeside or Westfield and tell me if you think we are in recession? This is from a survey of 8,000 firms? Really? And 0.2% for crying out loud? What is the tolerance in the surveys? If they spoke to another 1,000 firms, we might not get the same result. And there has been a total reduction in GDP of 0.5% over the last six months! It may be technically a recession but it must be the most shallow one on record! A why is it cast in stone that two quarters negative growth is a technical recession? Who dreamt that one up and when? Probably some American economist in the 1920’s. Well, this is 2012 and I am telling you that things are not as bad as all that at the coal face…

  • Anon 25th April 2012 at 2:59 pm

    Are we surprised? When the directors of large corporate companies such as energy providers, do nothing to reduce their prices and dent their ‘profits’ same with oil, and then we have the banks (who face it control everything) start hiking SVR’s and available rates with no logical explanation other than they are trying to find the money to pay for all the PPI claims they’ve had through, their previous greed fueled transactions. This combined with the cuts to Child Benefit wiped £350 off my disposable income this month, and the government say we need to ‘spend’ to encourage the recovery, is every body INSANE!? what would they like us to ‘spend’??? I’m pretty sure last time I tried, the supermarket didn’t accept buttons!

  • We're all doomed!! 25th April 2012 at 2:31 pm

    Can we blame the FSA for this one?!!!