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Thread: UK falls back into recession
04-26-2012, 08:29 AM #1
UK falls back into recession
Britain's economy has fallen back into recession for the first time since 2009 after official figures on Wednesday showed that it unexpectedly contracted during the first three months of the year.
The Office for National Statistics said economic output as measured by gross domestic product fell by 0.2 per cent in the first three months of the year from the previous quarter.
The first quarter drop follows the 0.3 per cent decline recorded in the last quarter of 2011 and means Britain has returned to recession - two consecutive quarters of negative growth are required for a country to be officially deemed to be in recession.
The first quarter decline was unexpected - the consensus in the markets was that the British economy eked out growth, albeit of a modest 0.1 per cent.
"The government and the Bank of England needed a sharp shock. They just got it," said Marcus Bullus, trading director at MB Capital in London.
Treasury chief George Osborne said the debt crisis afflicting the 17-country eurozone has impeded Britain's recovery, but he said he would stick to his "credible plan" to cut the country's budget deficit.
A more detailed look at the first quarter figures showed that a 0.1 per cent in Britain's big services sector was not enough to offset a 3 per cent in construction and a 0.4 per cent in production industries including manufacturing and energy production.
Though there have been some concerns about the way construction output in particular is measured, Vicky Redwood, chief U.K. economist at Capital Economics said she would not dismiss the official data.