The UK economy shrank by more than first thought, down 0.3% in the first quarter of 2012, and down 0.6% over the past two quarters - a deeper double-dip.
It’s grim. The UK economy shrank by more than first thought, as Chart 1 shows, down 0.3% in the first quarter of 2012, and down 0.6% over the past two quarters – a deeper double-dip than initially estimated.
• UK gross domestic product (GDP) in volume terms decreased by 0.3 per cent in the first quarter of 2012, revised from a previously estimated decline of 0.2 per cent;
• Output of the production industries fell by 0.4 per cent, within which manufacturing output was flat;
• Output of the service industries rose by 0.1 per cent, while output of the construction industry fell by 4.8 per cent;
• Household final consumption expenditure increased by 0.1 per cent in volume terms in the latest quarter;
• In current price terms, compensation of employees was unchanged in the first quarter of 2012.
• US economy grows as UK economy shrinks 27 Apr 2012
• Osborne’s expansionary fiscal contraction has failed 24 Apr 2012
Responding to the poor figures, shadow chancellor Ed Balls laid the blame squarely at the doors of Numbers 10 and 11 Downing Street:
“Our complacent and out of touch prime minister and chancellor have spent the last week claiming their plan is on track, but these figures show that Britain’s double-dip recession is even deeper than first thought.
“What more evidence can David Cameron and George Osborne need that their policies have failed and that they now need a change of course and a plan B for growth and jobs?… It is families and businesses that are paying the price with incomes being squeezed, companies going bust and long-term unemployment at a 16 year high.”
Looking at international comparisons, he added:
“It’s now clear that this is a recession made in Downing Street by this government’s failed policies.
“Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months.”
Indeed, in the 18 months since the spending review in the autumn of 2010 the UK economy has shrunk by 0.4 per cent – and looking further back, the US economy is now 1.3 per cent above its pre-crisis peak, the UK economy 4.4 per cent below. Grim times indeed.