UK economy shrinks fastest for 50 years
Official figures show that the UK economy has shrunk by 2.4 per cent in the first quarter of 2009. This represents a much worse picture than previously expected ad at the fastest rate in over 50 years. The Office for National Statistics revised its own initial estimate which showed a contraction of 1.9 per cent and analysts say the figures should now show a 2.1 per cent drop.
The change in the expected figure is partly due to a change in the way the ONS calculates them. The figures relate to construction and services output and construction was revised down to -6.9 per cent which was down from -2.4 per cent with an even bigger drop in services output, revised to 1.6 per cent from 1.2 per cent although industrial output was revised up to -5.1 per cent from an initial assessment of -5.3 per cent.
The figures show that GDP fell in the second quarter of 2008 and proves that the UK has now been in a recession for a year.
Recently, the think-tank the Organisation for Economic Co-operation and Development, predicted that the UK economy would shrink by 4.3 per cent and that there would be zero growth for 2010, unemployment would top 3 million.
In April the chancellor Alistair Darling, predicted that the UK’s economy would contract by 1.6 per cent during the first three months of the year. The recent figures will be a set back to the chancellor and the treasury.
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