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| Sharp contraction for UK economy | Sharp contraction for UK economy |
| (10 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 the construction and manufacturing 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. |
| It's disappointing to have a fall as big as this Ross Walker, economist at RBS Financial Markets | |
| 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. |
| The figures will make it more difficult for the Treasury to reach its forecast of a 3.5% decline in the UK economy for the year, made in the April Budget. | The figures will make it more difficult for the Treasury to reach its forecast of a 3.5% decline in the UK economy for the year, made in the April Budget. |
| But Chief Secretary to the Treasury Liam Byrne said it would not be revising its forecast. | But Chief Secretary to the Treasury Liam Byrne said it would not be revising its forecast. |
| "There have been some tentative signs that the fall in output is moderating and I remain confident but cautious about the prospects for the economy," he added. | "There have been some tentative signs that the fall in output is moderating and I remain confident but cautious about the prospects for the economy," he added. |
| 'Lower incomes' | |
| 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. |
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| 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%. | 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%. | Quarterly manufacturing output fell by 5.5%. |
| Meanwhile, real household disposable income fell by 2.4%, while the savings rate dropped from 4% to 3%. | Meanwhile, real household disposable income fell by 2.4%, while the savings rate dropped from 4% to 3%. |
| "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. | |
| "It's disappointing to have a fall as big as this." | |
| Getting better? | Getting better? |
| Despite the economy's big downward revision for the first quarter of 2009, the expectation is that the official figures for April to June will be nowhere near as bad when the first estimates are published at the end of July. | Despite the economy's big downward revision for the first quarter of 2009, the expectation is that the official figures for April to June will be nowhere near as bad when the first estimates are published at the end of July. |
| Earlier this month, the ONS said industrial production rose in April, its first month-on-month climb since February of last year. | Earlier this month, the ONS said industrial production rose in April, its first month-on-month climb since February of last year. |
| A growing number of reports from the likes of business organisation CBI have also predicted that the worse of the economy is over. | A growing number of reports from the likes of business organisation CBI have also predicted that the worse of the economy is over. |
| Martin Weale, director of the National Institute for Economic and Social Research, whose organisation estimates GDP on a monthly basis, earlier told the BBC that he expected second quarter GDP to be flat. | Martin Weale, director of the National Institute for Economic and Social Research, whose organisation estimates GDP on a monthly basis, earlier told the BBC that he expected second quarter GDP to be flat. |