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Economy shrinks by a shock 0.7%
Chancellor George Osborne has come under fresh pressure to ease his austerity measures after shock figures revealed the economy suffered a worse-than-expected 0.7% decline between April and June.
Britain is thought to be in the longest double-dip recession since the Second World War
Chancellor George Osborne has come under fresh pressure to ease his austerity measures after shock figures revealed the economy suffered a worse-than-expected 0.7% decline between April and June.
Dire construction and manufacturing output drove the biggest drop in GDP since the height of the financial crisis three years ago, alarming forecasters who had expected a much smaller 0.2% fall.
It is the third quarter in a row that the economy has contracted, meaning the UK is now mired in the longest double-dip recession since quarterly records began in 1955 - and possibly since the Second World War.
An extra bank holiday for the Queen's Diamond Jubilee and record rainfall played a significant part in the biggest slump since the height of the financial crisis three years ago, according to the Office for National Statistics (ONS).
But economists said the figures were a symptom of underlying weakness, with one branding the second quarter of 2012 a "disaster".
Labour and the unions seized on the figures as fresh evidence that the painful austerity measures are choking off the recovery, but a defiant Mr Osborne said the UK is battling "deep-rooted economic problems".
And Prime Minister David Cameron said the Government would "redouble all our efforts to get on top of our debts, deal with our deficit, get our economy moving".
The UK's economy is 0.3% smaller than when the coalition came to power in the second quarter of 2010, the ONS figures showed, and is still 4.5% lower than its 2008 peak.
Of particular concern was a 5.2% decline in the construction sector, while manufacturing also suffered hefty falls as its main export markets were hit by the eurozone debt crisis.
The pound fell against the euro as the data increased chances that the Bank of England will pump more emergency money into the economy or drop interest rates further.
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8Comments
25/07/2012 13:39
25/07/2012 14:18
Why nobody has thought to stop George Osborne and David Cameron tipping up billions to prop up foreign economies and then spouting off about our need for austerity measures I can't imagine. This Government and its policies are an absolute disgrace like previous Governments they cant manage this Country or its economy but have the audacity to assume we should nanny every other economy. The Euro is and has been from the outset a disaster you don't need to be an economist to work that one out. I suggest they leave that one to Germany and sort out the finances in this country (not by expecting us to prop up every other economy).
26/07/2012 13:24
The economic system within this country will never succeed without drastic measures.
Think about it in simplistic terms.
Think of the wealth of this country as a big pie.
Think of how that pie gets divided up and distributed.
Some people get a decent slice.
Some people get such a big slice that they have to hoard it.
Most people, however, get a small slice that they struggle to get by.
Some people get such a small slice that they simply can't survive.
Some may even be driven to riot in the streets.........
Some people become politicians, fiddle the system to get their big slice and dictate to others that the pie isn't as big as we thought it was and advise us that we should accept even less!
Why can't we review our financial system and look to adjust how fairly we slice up that pie and distribute it?
Sorry bankers and fat cats - no more £1M bonuses.
It could well be that our pie is big enough for everyone to get a slice after all!
We should be discussing maximum wages and caps on personal wealth. Money hived away in offshore accounts does little to stimulate the economy.
25/07/2012 17:29
No doubt the current government and there radical cuts in spending, they seem to be investing in speculative parts of the economy that only do well in good times and don't seem to be a good choice, the Americans have decided to reduce the debt overtime which seems more sensible which was what labour were thinking about doing and they are moving along with some growth along with the developing countries who have no debt or very little debt. The problem is that if no one wants to buy then no one will lend it's too risky under current circumstances. I think Britain has lost it's way over the last few decades and this will continue to be the case for some time I think as they can't move one way without it affecting something else. Simply the US has superior goods and a cheaper currency and only Germany can compete with there manufacturing of auto mobiles which people are wiling to pay more for. The problem is that Britain doesn't have a sector to contribute large growth over the long term and will constantly develop it's businesses to a level and then sell as they can't go any further. If anyone knows of any sectors in UK that are looking promising for long term huge growth please let me know.
27/07/2012 19:28
26/07/2012 18:55
Well done Barry !
It's never them is it ? Worst double dip recession for 50 years ..and ...oh who was in government then I wonder ? surprise surprise .....
And with a chancellor who claims to be 110% certain of something yesterday, is it any wonder? in local parlance/ slang , it is perhaps acceptable to say 110% certain. But from someone in charge of the nations finances in a statement ? 100% is the maximum , total , end of .....
26/07/2012 09:59
There's no surprise, the whole demography of private commerce has changed irrevocably.
It's the Internet shopping. Far less strain on homeowners, no traffic, no parking, no wear-an'-tear
and depreciation, lower fuel bills, all equalling more "Quality Time" with family.
Lots of internet purchases are vat free and also free postage.
Go Figure!
25/07/2012 16:29
cristina
Your argument whilst popular and chimes with many - is just far too narrow in apportioning the blame. Of course governments should have overall responsibility to run a State. But far too many governments have relinquished that responsibility over the past 100 years and given in to global capitalism. It's the bean counters who run things mostly nowadays. Politicians in the so called developed and emerging economies in the world are merely puppets to those with the most cash to move around. Politicians appear powerless, and therefore, unless they do as they're told by big buisness (Corporations and Global Conglomerates) they face being undermined by these institutions who now basically call all the shots. There's no mean guy here. We are all to blame as well for allowing it to happen to us. Power you see is the ultimate name of the game. He who truly controls the money controls everything.
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