Public sector ‘marked decline’ blamed for double-dip recession
Official economic figures released today showed the UK economy has entered a double-dip recession, with Gross Domestic Product falling by 0.2% in the first three months of the year - following a 0.3% shrinkage in the final quarter of 2011.
According to the Office for National Statistics, a 3% fall in construction sector output - led by a marked decline in public sector and infrastructure spending – contributed significantly to the poor results.
The worsening economic news will put pressure on David Cameron’s embattled coalition government, whose popularity has plummeted since last month’s Budget.
When George Osborne made his Budget announcement on 21 March, the Treasury had predicted economic growth at 0.3% for the first quarter of 2012, based on the independent Office for Budget Responsibility’s forecast.
Since taking the reins at the Treasury, the economy under Mr Osborne's watch has grown a mere 0.4% over eight quarters as against growth calculations of 4.3% contained in the deficit reduction plan set out at the emergency budget of June 2010.
Responding to the news, Mr Osborne today said: 'The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing.’
Figures released yesterday showed the government met its borrowing target of £126bn for the financial year to March - £11bn lower than at the end of last financial year.
Dave Prentis, general secretary of trade union Unison, said that instead of looking to ‘austerity Europe, the government must turn its head to America where public spending has returned the economy to growth.’