Confirmed: Double-dip recession even worse than feared

By Alex Stevenson

Britain's economy shrunk more quickly than expected in the first quarter of 2011, in a setback to pundits who had doubted whether the UK really was suffering a double-dip recession.

The Office for National Statistics was met with disbelief in many quarters when it announced GDP contracted by 0.2% in January, February and March this year.

Today's firmer estimate has revised the negative growth to minus 0.3%, matching the 0.3% contraction seen in the final quarter of last year. Two consecutive quarters of negative growth are the technical definition of a recession.

"It's now clear that this is a recession made in Downing Street by this government's failed policies," shadow chancellor Ed Balls said.

"Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago.

"The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months."

Poor performance in the construction sector, which shrunk by 4.8%, was to blame for the contraction. Production industries output fell by 0.4%, while manufacturing was broadly flat. Household consumption actually increased by 0.1%.

Howard Archer, chief UK and European economist at IHS Global, commented: "Very disappointing."

The news is a blow to the government and means that not only is it confirmed that the UK has entered a double-dip recession, but also that in the 12 months to March 2012 the UK economy contracted by 0.1 per cent.

"Now that things have got worse and Britain is in an even deeper double-dip recession, when will David Cameron and George Osborne finally take action?" Mr Balls added.

"If we see slow growth and high unemployment being entrenched for months and years to come, families and businesses will pay a heavy long term price. There is a better way, but there can be no more complacency and no more excuses for delay."