Breaking news: UK back in recession
THE UK has returned to recession with new figures showing the economy contracted in the first three months of 2012.
GDP shrank by 0.2%, according to the Office of National Statistics, following a 0.3% contraction in the economy at the end of 2011. Two consecutive quarters of negative GDP growth mean the UK economy is now considered to be in recession.
However, business groups have expressed concern about the way ONS figures on the economy are compiled and contrasted its view with a series of surveys which have suggested a modest upturn in activity.
David Kern, chief economist at the British Chambers of Commerce, said: “The figure is disappointing, and paints an unduly pessimistic picture of the state of the economy. Many commentators will question the accuracy of the data, particularly as it is based on only 40% of the information used for these estimates.
“We think it is likely that the preliminary estimate will be revised upwards when more information is available. For the time being, the main priority is to minimise any possible damage to business confidence. These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism.”
John Cridland, CBI director-general, said: “This disappointing news comes as something of a surprise. Since the turn of the year, business confidence has improved and, while still challenging, underlying economic conditions also appear to have strengthened.
“In particular, the weakness of the services sector data does not tally closely with a range of survey indicators suggesting that the sector has been picking up through the first quarter.
“Looking forward, there are indications that the economy is slowly recovering from the blow to confidence and activity which resulted from last autumn’s turmoil in Eurozone financial markets.”
