Jan 25, 2013 No Comments ›› Pat Dollard
Excerpted from The Guardian: Britain could be on course for its third recession in four years after the economy shrank by 0.3% in the last three months of 2012.
A fall in manufacturing output dragged down the economy, countering a small rise in construction between October and December last year, according to the Office for National Statistics.
The figures were worse than expected and could put pressure on the government to consider a “Plan B” that would stimulate demand.
The prospect of a triple-dip recession, which will become official should the economy contract again in the first quarter of 2013, is expected to further dent the confidence of consumers and companies, hitting high street spending and business investment.
The contraction in GDP followed a near 1% rise in GDP in the third quarter when the economy had been boosted by the Olympics.
On Thursday chancellor George Osborne was forced to rebut comments by the chief economist of the International Monetary Fund that the UK should ease back on austerity to give the ailing economy a boost.
The economy remains 3.5% below its peak in 2007 and is not expected to regain its previous level for at least another two years, making it the longest recovery in 100 years.
One of the biggest factors undermining growth in the period was a cut in government spending. A post-Olympic cut in spending on sport and recreational facilities pushed down the index for government and other services by 0.7%, following an increase of 1.6% in the previous quarter. All Olympic ticket sales were counted in the previous quarter, giving the ailing economy a one-off boost.
A survey of economists had predicted a 0.1% drop in GDP in the fourth quarter, though several prominent analysts forecast a bigger contraction after a series of surveys last year showed the manufacturing industry suffering from a downturn in exports.
The ONS data showed that within the manufacturing sector, mining and quarrying output suffered its biggest decline since records began because of maintenance on North Sea oil and gas fields.