Double-dip hits UK and there’s worse to come
Britain has plunged into a double-dip recession and families are being warned of worse to come, shock figures reveal.
The economy shrunk by 0.2 per cent in the first three months of the year. The grim news, which follows a fall of 0.3 per cent in the previous quarter, is a blow to Chancellor George Osborne.
It left him battling to defend his austerity strategy to tackle Britain’s debt mountain. Economists warned that the slump back into recession could deliver a “fatal blow” to the fragile revival of consumer and business confidence and knock the recovery even further off course.
“It’s a miserable day for the economy as a whole,” said Michael Saunders, head of European economics at Citigroup, adding: “This is the worst recession recovery cycle of the last 100 years ... worse than the Thirties.”
The gloomy figures came at a dreadful time for the Government following the claims over Culture Secretary Jeremy Hunt’s links to the Murdoch empire, just before local elections, and as it struggles to move on from the Budget “omnishambles” of recent weeks.
Mr Osborne vowed though to stick to his swingeing public spending cuts and tax changes and sought to blame the sickly eurozone for dragging Britain down. He said: “It’s a very tough economic situation. It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime — even after the recent fall in unemployment. The one thing that would make the situation even worse would be to abandon our credible plan and add more borrowing and even more debt.”
But shadow chancellor Ed Balls tore into the coalition’s blueprint to rescue the economy which has now not grown since the Spending Review in autumn 2010. “David Cameron and George Osborne arrogantly and complacently dismissed people who warned of the risk of a double-dip recession and the country is now paying a very heavy price. Their economic credibility is now in tatters,” he said.
The Bank of England and the independent Office for Budget Responsibility have both been left looking far too optimistic about the country’s economic outlook — having predicted that the UK would avoid a double-dip recession — the first since the Seventies.
Some experts believe that many households could face another decade of belt-tightening as they seek to get their debts under control.
The recession — technically defined as two periods of negative growth — was driven by a sharp fall in construction — down three per cent, its biggest contraction since the first quarter of 2009.
But economists, some of who questions the accuracy of the GDP figures from the Office for National Statistics, were particularly dismayed by the lack of significant growth across most of the economy, with the huge services sector limping up by a measly 0.1 per cent.
Chris Williamson, chief economist at Markit, said: “The danger is that these gloomy data deliver a fatal blow to the fragile revival of consumer and business confidence seen so far this year.”
Retail sales were boosted last month by panic-buying of petrol.
