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Data set to show slump continuing Decline of the UK economy worsens
(30 minutes later)
The UK economy shrank in the first three months of 2009 at about the same pace as it did in the final quarter of 2008, figures are expected to show. The UK economy shrank 1.9% in the first three months of 2009, according to gross domestic product (GDP) data from the Office for National Statistics.
Analysts forecast that gross domestic product (GDP) will have shrunk by 1.5% from January to March, having dropped 1.6% between October and December 2008. The figure was much worse than the expected level of about 1.5% and followed the contraction of 1.6% in the previous three month period.
The government has already warned that the economy will shrink this year at its fastest pace since World War II. It was the third consecutive quarter of negative growth in GDP, and confirms that the economy is still in recession.
It follows Wednesday's announcement that 2.1 million people are unemployed. GDP measures the value of all the goods and services produced by a country.
We are still talking about contracting GDP and rising unemployment for the rest of the year Simon HayesEconomist, Barclays Capital Coping in recession
Martin Weale from the National Institute of Economic and Social Research has predicted that the economy will shrink by 6% in the duration of the current recession.
"There's always a risk that, as has happened with the financial crisis, people think things have calmed down and then it turns nasty again," he said.
"But unless something extremely unpleasant like that happens I think probably we have had the bulk of the contraction now."
See how the economy has grown since 1980
Continuing problems
In January, the UK economy met the widely accepted definition of a recession: two consecutive quarters of negative economic growth.
Suada Hamidi who is unemployed, explains how she survives on £50.95 a week
The chief UK economist at Barclays Capital, Simon Hayes, said rising unemployment and concern over finances meant that consumers and businesses would have continued to cut back on spending at a similar rate early this year as at the end of last year.
"The sharpest falls in GDP may have already happened - but we are still talking about contracting GDP and rising unemployment for the rest of the year," he said.
The Chancellor, Alistair Darling, told the House of Commons on Wednesday that the government would be forced to borrow £175bn this year as the recession battered the UK economy.
In his Budget he said that the UK would return to growth by the end of 2009. However, many analysts say that this was optimistic.
The IMF has forecast that the UK economy will decline by 4.1% this year and by 0.4% next year.
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