The prospect of another three months of decline, following Wednesday’s shock revelation the UK slipped into its first double-dip recession since 1975, will pile pressure on Chancellor George Osborne, reported the Telegraph.
According to the Office for National Statistics (ONS), the economy shrank 0.2% in the first quarter of the year and is now roughly 0.2% smaller than when the Chancellor unveiled his spending review in October 2010.
Gerard Lyons, Standard Chartered’s chief economist, said: “The likelihood is that the data will further dent confidence and push the recovery back.”
Michael Saunders, Citi’s UK economist, added that the economy is likely to weaken further.
Under the Bank of England’s forecast for another 0.2% retreat in the second quarter, and following the 0.3% decline in the final three months of 2011, he calculated that for the 12 months to June the UK would suffer its first annual contraction since the recession ended of 0.1%.
“The data make it clear that the economy is very weak,” he said.
