UK economy shrinking at record rate

Posted on 1 Jul 2009 by The Manufacturer

Statistics released by The Office for National Statistics (ONS) show Britain’s economy having suffered its largest quarterly decline for 51 years between January and March 2009.

The UK economy shrank by 2.4%, far worse than feared, given that analysts had initially predicted a contraction of only 1.9%.

According to Ross Walker, economist at RBS, the figures presented a ‘You’ve never had it so bad’ summary of the state of the UK economy in Q1. “While to some extent this is ‘old news’, it does serve to emphasise the size of the hole out of which the UK must climb,” said Walker. “The survey data suggest we have at least stopped digging, but the economy remains on course for a lacklustre pace of recovery. ”

Conversely, some analysts are spinning the statistics more positively, James Knightley, economist at ING Financial Markets, accepting that, whilst the figures are: ‘‘Much worse than expected, they should only provide a temporary knock to sentiment.’’

‘‘The services sector is already on positive territory, with the manufacturing and construction indicators edging close to the break-even level.’’

Edward Machin