British economy in double-dip recession
Britain’s Chancellor of the Exchequer, George Osborne, the global leader in voluntary austerity cuts. A new report shows that for all his rhetoric only a tiny number of cuts have actually been put in place – but still enough to drag Britain into recession.
LONDON, UK – The UK economy has fallen back into recession, after contracting by 0.2 percent in the first three months of 2012, official data showed Wednesday.
The decline follows a 0.3 percent contraction in the last quarter of 2011, providing two consecutive quarters of a decline in output.
It is Britain’s first double-dip since 1975, The Daily Telegraph reports. The last time the UK was in recession was in 2009. Economists had expected data to show that the UK economy had grown by 0.1 percent between January and March, according to The Financial Times.
Reuters reported that Prime Minister David Cameron said the news was "very, very disappointing."
"I don't seek to excuse them. I don't see to try to explain them away. There is no complacency at all in this government in dealing with what is a very tough situation that frankly has just got tougher," he said in parliament.
The Office for National Statistics (ONS) said a fall in public sector investment had contributed to a sharp decline of 3 percent in the construction sector, which was the main reason behind the surprise figures, according to the BBC.
Output of the production industries also fell by 0.4 percent, the ONS said, while the services sector, responsible for three quarters of the UK economy, grew by just 1 percent.
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The dramatic fall in output is a major blow to Chancellor George Osborne, whose drive for austerity is expected to slow down growth over the coming months.
Osborne said the debt crisis raging in the euro zone, to which some 40 percent of the UK’s exports go, had impeded Britain’s recovery, and that the economy was providing harder to mend than had been expected:
“It’s a very tough economic situation. It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime,” he said.
“But over many years this country built up massive debts, which we are having to pay off. The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”
However, Ed Balls, opposition chancellor for the Labour Party, said Downing Street’s economic credibility was “in tatters,”
He said the government’s “failed policies” were behind Britain’s plunge back into recession, and that growth in the European Union and throughout the rest of the world were the only factors that had prevented the UK from entering recession earlier.
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