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UK's first double dip recession since the 1970s

Tuesday, April 24, 2012 - 02:27

April 25 - Britain slipped into recession for the second time since the financial crisis, its first double dip recession since the 1970s, heaping pressure on Prime Minister David Cameron's government and its austerity measures. Joanna Partridge reports.

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A unexpected return to recession. The UK's output fell in the first three months of the year, taking it into the second recession since the financial crisis. The Office for National Statistics said Britain's economy contracted by 0.2% in the first quarter of 2012, after shrinking in the final quarter of 2011. SOUNDBITE: Joe Grice, Office for National Statistics Chief Economist, saying (English): "Output of the production industries decreased by 0.4%, output of the construction sector decreased by 3.0%, and output of the services sector increased by 0.1%." The figures have led to the first so-called double dip since the 1970s. It'll pile more pressure on Britain's coalition government, which has fallen in opinion polls since its annual budget statement in March. Many economists had expected Britain to grow very slightly in the first quarter. Chancellor George Osborne says the recovery is taking longer than hoped, but there's no scope for loosening the government's austerity measures. SOUNDBITE: George Osborne, British Chancellor, saying (English): "We've got to go on, dealing with those debts, making our businesses more competitive so that they can create jobs, helping young people get into work, and making sure that we don't deliberately add to borrowing, don't deliberately spend more and make a difficult situation even worse." Some are hoping Britain will see a bounce in the summer from the Queen's Diamond Jubilee celebrations and the Olympics. But Chris Scicluna from Daiwa Capital Markets sees no long term boost and forecasts zero GDP growth in 2012. SOUNDBITE: Chris Scicluna, Daiwa Capital Markets, saying (English): "The UK government has a very ambitious fiscal austerity programme and in fact the pace of spending cuts is probably set to accelerate over the coming couple of years so it is very difficult to envisage the UK returning to the kind of rates of growth we saw in the pre-crisis years." The government desperately needs growth if it is to achieve its goal of wiping out Britain's large budget deficit over the next five years. But growth is elusive and in the UK, as in much of Europe, voters are saying they've have had enough of cuts that don't seem to be leading to an economic upturn. Joanna Partridge, Reuters

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UK's first double dip recession since the 1970s

Tuesday, April 24, 2012 - 02:27