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UK economy sees 2.4% contraction Sharp contraction for UK economy
(9 minutes later)
The UK economy contracted 2.4% in the first quarter of 2009, its biggest quarterly decline in 51 years, according to the latest official data.The UK economy contracted 2.4% in the first quarter of 2009, its biggest quarterly decline in 51 years, according to the latest official data.
The decline was more severe than the earlier estimate of a 1.9% fall, and worse than analyst expectations.The decline was more severe than the earlier estimate of a 1.9% fall, and worse than analyst expectations.
The Office for National Statistics (ONS) blamed the sharp revision primarily on weaker output in both the construction and services sectors. The Office for National Statistics (ONS) blamed the sharp revision primarily on weaker output in the construction and manufacturing sectors.
It also said the recession started earlier than first thought last year.It also said the recession started earlier than first thought last year.
The ONS now says the recession began during the second quarter of 2008 rather than during July to September, so that the recession has now been running for a whole year.The ONS now says the recession began during the second quarter of 2008 rather than during July to September, so that the recession has now been running for a whole year.
'Disappointing''Disappointing'
January to March's quarterly 2.4% decline was the sharpest contraction since the second quarter of 1958. Analysts had only expected a 2.1% fall.January to March's quarterly 2.4% decline was the sharpest contraction since the second quarter of 1958. Analysts had only expected a 2.1% fall.
On an annual basis, the ONS said economic output shrank 4.9% during the first quarter of 2009, compared with its earlier estimate of a 4.1% fall.On an annual basis, the ONS said economic output shrank 4.9% during the first quarter of 2009, compared with its earlier estimate of a 4.1% fall.
The Treasury predicts the UK economy will contract by 3.5% for the year. Construction output decreased between January and March by 6.9%, while the service sector contracted by 1.6% - led by the banking and financial industries, which saw output slip 2.5%.
Quarterly manufacturing output fell by 5.5%.
"The figures are disappointing," said Ross Walker, economist at RBS Financial Markets."The figures are disappointing," said Ross Walker, economist at RBS Financial Markets.
"We knew about the construction revisions in advance and the fall wasn't quite as big as the ONS had indicated. But we've got a much bigger fall in services output.""We knew about the construction revisions in advance and the fall wasn't quite as big as the ONS had indicated. But we've got a much bigger fall in services output."
The Treasury predicts the UK economy will contract by 3.5% for the year.