The economy has fallen back into recession after GDP contracted 0.2% in the first quarter of the year, according to the latest Office of National Statistics (ONS) figures.
This follows a 0.3% decline in the final quarter of 2011 and means that the UK is now officially in recession again - sending the country into its first double-dip since the 1970s.
KPMG chief economist, Andrew Smith commented on the data: “Output remains broadly unchanged from its level in the third quarter of 2010 and, four years on from its pre-recession peak is still some 4% down– making this slump longer than the 1930s Depression.”
Looking forward, he added: “Output is expected to remain weak in the second quarter and with extra holidays, the Jubilee and the Olympic Games distorting the picture over the summer it will be some time before the underlying picture is clear. But even if activity recovers in the second half, overall this looks like being - at best - another year of weak growth, held back by squeezed real incomes and public spending cuts. Recovery postponed (again).”
Richard Murphy said in his blog he suspects during the course of this year we will come out of recession, “but only just”. He added that there is only one way to restore balance in our economy: “for the government to spend now on the creation of new infrastructure projects, new green energy projects, on the backlog of repairs that need to be undertaken in our public sector properties, in providing services that people need, and in investing with business in our future in sectors such as non-carbon energy.”
According to David Ingall, of Yorkshire-based accountants JWPCreers, “The 0.2% shrinkage is only a statistic. We have to keep on going – there is no choice.”
The impact of the figure is more to do with its impact on business and conumer confidence, he explained. “One major problem is our neighbours across the channel and their refusal to accept that they have to resolve the issues surrounding their currency.”
For further debate on the causes, effects and progress of the economic downturn, visit our Economy discussion group.