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Decline of the UK economy worsens Decline of the UK economy worsens
(30 minutes later)
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.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.
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 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.
Taken together, it was the worst six-month decline in GDP since the ONS began publishing the figures.Taken together, it was the worst six-month decline in GDP since the ONS began publishing the figures.
GDP measures the value of all the goods and services produced by a country.GDP measures the value of all the goods and services produced by a country.
It was the biggest three-month decline in GDP since the third quarter of 1979.
There's still a lot of weakness to come, but not as weak as we're seeing today George Buckley, Deutsche Bank Taking the UK's economic pulse How to cope with recession
GDP for the year to the end of March fell by 4.1%.
It was the third consecutive quarter of negative growth in GDP, and confirms that the economy is still deep in recession.
'Weakness to come''Weakness to come'
The contraction in the January to March period was the biggest three-month decline in GDP since the third quarter of 1979.
We've not seen a fall that size in the history of our numbers since the Second World War Jon Beadle, Office for National Statistics Taking the UK's economic pulse How to cope with recession UK faces decade of pain Send us your comments
The ONS figures also showed that GDP for the year to the end of March was down by 4.1%.
The latest figures mean that GDP has now shrunk for third quarters in a row, and confirm that the economy is still deep in recession.
The biggest contributor to the decline was the manufacturing sector, which shrank by 6.2% in the first three months of the year, having decreased by 4.9% in the previous quarter.The biggest contributor to the decline was the manufacturing sector, which shrank by 6.2% in the first three months of the year, having decreased by 4.9% in the previous quarter.
"The last six months has seen the sharpest fall [in GDP] on record and the manufacturing number... is a record," Jon Beadle from the Office for National Statistics (ONS) told the BBC."The last six months has seen the sharpest fall [in GDP] on record and the manufacturing number... is a record," Jon Beadle from the Office for National Statistics (ONS) told the BBC.
"We've not seen a fall that size in the history of our numbers since the Second World War.""We've not seen a fall that size in the history of our numbers since the Second World War."
Analysts suggested that this would be the worst contraction in the current recession.Analysts suggested that this would be the worst contraction in the current recession.
"I very much doubt that GDP is going to contract at these sort of rates for any longer, but I do think it will still contract all throughout 2009," said George Buckley at Deutsche Bank."I very much doubt that GDP is going to contract at these sort of rates for any longer, but I do think it will still contract all throughout 2009," said George Buckley at Deutsche Bank.
"So there's still a lot of weakness to come, but not as weak as we're seeing today.""So there's still a lot of weakness to come, but not as weak as we're seeing today."
Gloomy forecasts
The worse-than-expected figure casts doubt on the chancellor's prediction that GDP for the whole of 2009 would only shrink by 3.5%.
"A contraction of at least 4% is much more likely," said Benjamin Williamson at the Centre for Economic and Business Research.
"Our latest forecast is for a 4.5% contraction this year, making 2009 the steepest single year contraction in economic activity since the 5.1% fall in 1931."
The ONS cautioned that the GDP figure was only its preliminary estimate and could be revised.
There was some better news for the economy in the latest retail sales figures.
Retail sales unexpectedly rose 0.3% in March, making them 1.5% above the level seen in March 2008.