British economy back in recession
BRITAIN’S ECONOMY is back in recession, according to official figures, piling pressure on the government and providing fodder for the critics of austerity.
The economy contracted 0.2 per cent in the three months to the end of March on top of a 0.3 per cent decline in the last quarter of 2011, providing two successive quarters of a decline in output – a definition of recession used by many economists.
Michael Saunders, economist at Citigroup, said Britain was experiencing the deepest recession and weakest recovery for 100 years as the country slid into recession for the second time in three years.
The figures dented confidence in sterling, and sent it falling against other major currencies.
Some currency traders began adjusting their expectations that the Bank of England, after appearing to signal an end to its gilts purchases – quantitative easing – may decide to resume them. Economists had broadly expected first-quarter gross domestic product to show a rise of 0.1 per cent rather than a fall of any size.
Ed Miliband, leader of the opposition Labour Party, blamed the government for the data, saying it was proof that ministers had been “cutting too far, too fast”.
“This is a recession made by him and the chancellor in Downing Street,” Mr Miliband said during prime minister’s questions in the Commons.
Prime minister David Cameron said the figures were “very, very disappointing” and a “very tough situation . . . has just got tougher”.
Chancellor George Osborne said the recovery was taking longer than expected, but the task of returning to growth was made harder when much of the rest of Europe was in recession or heading into one.
According to the Office for National Statistics, the construction sector proved to be the biggest drag on the UK economy in the first quarter. Output in the sector fall 3 per cent after a 0.2 per cent decline in the last three months of 2011. –(Copyright The Financial Times Limited 2012)