The UK has slumped back into recession after a preliminary estimate by ONS showed a 0.2 per cent fall in GDP growth in the first quarter of this year.
This is after UK’s GDP contracted by 0.3 percent at the end of 2011.
A sharp decline in the construction sector and a weak output from the manufacturing sector have been blamed for the recession.
This is the first ‘double-dip’ that the UK has suffered since the 1970s.
In a statement, chancellor George Osborne said: “It’s a very tough economic situation. It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime.
“The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”
Economists warn that the recession would make businesses cut spending and growth would be dismal this year.
KPMG chief economist, Andrew Smith, said: “The 0.2 percent fall in GDP in the first quarter, coming on the back of the 0.3 percent decline at the end of last year, confirms that the UK moved back into technical recession over the winter.
“But worse, output remains broadly unchanged from its level in the third quarter of 2010 and, four years on from its pre-recession peak [it] is still some four percent down – making this slump longer than the 1930s Depression.
Smith points out that even if economic activity recovers in the second quarter of the year, 2012 will be another year of weak growth as spending and real incomes would feel the squeeze.
Try our free newsletter