UK still in recession

THE UK economy contracted unexpectedly between July and September by 0.4% leaving the country in recession.

Quarterly growth of 0.2% had been expected in figures released today by the Office for National Statistics (ONS) despite no growth in retail sales last months and a 2.5% decline in industrial output in August.

Although the figures can still be revised up or down, the fall is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters since recording began in 1955.

Decline in the services sector has been cited as a influential factor behind the drop along with catering, hotels and distribution.

The economy contracted 5.2% compared with the same period last year, which was marginally better than the record figure of 5.5% in the previous three months.

Experts predict that the latest ONS figures will force the Bank of England to consider its quantitative easing policy.

Chris Fletcher, deputy chief executive of Greater Manchester Chamber, said: “These figures are obviously disappointing and many people were predicting positive growth and an end to the recession. However even if the results were as predicted the economic challenges faced on a  daily basis by business would not have disappeared overnight.
 
“Despite some signs of increasing confidence there are still longstanding issues around cashflow and finance that are the main barriers holding back the start of real economic growth. These are the issues at the forefront of most businesses minds.”