UK recession fears heighten

Chancellor George Osborne.
Chancellor George Osborne.

LONDON — The UK economy shrank by 0.3 per cent in the last three months of 2012, further fuelling fears that the economy could re-enter recession.

The Office for National Statistics said the fall in output was largely due to a drop in mining and quarrying, after maintenance delays at the UK’s largest North Sea oil field.

The economy had grown by 0.9 per cent in the previous quarter, boosted by the London 2012 Olympic Games.

For the whole year, growth was flat.

The ONS said that the “bumpy economy” was on a “sluggish trend”.

Manufacturing fell by 1.5 per cent in the fourth quarter, the services sector was flat, but construction output rose by 0.3 per cent.

Within the manufacturing sector, mining and quarrying output fell by 10.2 per cent, the biggest decline since records began in 1997, driven by disruption to North Sea oil and gas fields.

If oil and gas extraction were excluded from the overall gross domestic product calculations, then the data would have shown that the economy shrank by only 0.1 per cent in the fourth quarter, the ONS said.

GDP is the sum of all goods and services made in the economy.

This is the first estimate of how the economy performed in the fourth quarter, and is subject to at least two further revisions as more data is collected.

Chancellor George Osborne said the figures were a reminder that the UK faces “a very difficult economic situation”.

He described them as “a reminder that last year was particularly difficult, that we face problems at home with the debts built up over many years, and problems abroad with the eurozone, where we export many of our products, deep in recession”.

“Now we can either run away from those problems or we can confront them. And I’m determined to confront them so we can go on creating jobs for the people of this country,” Osborne said.

But Labour’s shadow chancellor Ed Balls said: “Today’s news confirms what business leaders, retailers and families have known for many months – that depressed confidence and a chronic shortage of demand mean our economy continues to flat line.” (BBC)

Leave a Reply

Your email address will not be published. Required fields are marked *