For the first time since the 1970’s the UK has slipped into a double dip recession after the GDP fell by 0.2 per cent for the first quarter of 2012. Economists had predicted that the GDP would grow by 0.1 per cent which wasn’t overly positive but not as bad as the figures released by the ONS.
To be classed as in recession the UK’s GDP has to shrink for two consecutive months which has now happened. The GDP figure for the last quarter of 2011 was a drop of 0.3%.
The fall in the GDP for the last quarter has contradicted predictions from the independent office for budget responsibility, they predicted that the UK would avoid a second recession and see growth.
Once the new figures had been announced the Chancellor George Osborne 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.’ ‘’But over many years this country built up massive debts, which we are having to pay off.’
The Chancellor has been forced to defend his austerity drive which could slow growth over the short term future. The Prime Minister said the figure was “very, very disappointing” but added that that it would be “absolute folly” to change course and jeopardise Britain’s low borrowing rates.
“The one thing we mustn’t do is abandon spending and deficit reduction plans, because the solution to a debt crisis cannot be more debt.”