The UK economy has shrunk in size by 0.2% in the first quarter of 2012, placing the UK back in recession.
A widely accepted definition of a recession is two successive quarters of negative GDP. The economy contracted by 0.3% in the fourth quarter of 2011.
These latest figures were worse than expected, with the consensus opinion from economists forecasting growth of 0.1% in the first quarter.
This is the first recession in the UK since 2009. Due to the length of time that has passed between recessions, we feel it would be unfair to label this a ‘double dip’ recession, although no technical definition of the timescale required for a double dip recession exists.
The construction sector performed particularly badly, leading to the surprise contraction. In contrast, the size of the service sector grew by 0.1% in the quarter.
Whilst these figures could still be revised, it is bad news for the economy which has been struggling to find much needed growth.
Hopefully this latest recession will be short-lived and it should not derail the government from its current austerity strategy, which remains needed to deal with massive public debts.
Photo credit: Flickr/Anders V
