Contracting economy means UK stands on brink of triple-dip recession

 

Britain is on the brink of a triple-dip recession today after figures confirmed the economy contracted by 0.3 per cent at the end of 2012.

The Office for National Statistics (ONS) stuck by its previous estimate for the fourth quarter, although it now thinks the UK economy grew by 0.3 per cent across the whole of last year, rather than previous guidance of 0.2 per cent.

GDP figures for the current quarter are due to be released at the end of April, with the recent cold weather increasing the chances of two successive quarters of contraction, which would represent a return to recession.

The country's stagnant performance reflects a fall in industrial production of 2.1 per cent in the fourth quarter - including a 10.7 per cent slump in mining and quarrying - and the biggest fall since the first quarter of 2009.

However, household spending in the fourth quarter increased by more than previously thought, up 0.4 per cent from an earlier 0.2 per cent reading. Total disposable incomes rose by 2.1 per cent during the year as a whole, but slipped back 0.1 per cent in the fourth quarter.

IHS Global Insight economist Howard Archer said: "It looks touch and go whether the economy can avoid further contraction in the first quarter of 2013, and hence a 'triple-dip' recession."

He said heavy snowfall, which has hit parts of the UK in recent days, increased the chances of another quarter of falling output.

Marginal growth of 0.3 per cent in 2012 compared with 1 per cent in 2011.

The figures also showed a household savings ratio of 7.1 per cent, the highest since 1997, as people choose to save rather than spend. This figure was boosted by a £20.1 billion increase in wages and salaries versus 2011.

The UK's current account deficit shrunk to £14 billion in the fourth quarter - worth 3.6 per cent of GDP - from an upwardly revised £15.1 billion in the third quarter. For the year as a whole the UK's current account deficit was £57.7 billion.

The trade deficit - the difference between the value of Britain's exports and imports - widened to £9.6 billion in the fourth quarter, up from £8.1 billion in the previous quarter.

Companies exported 1.6 per cent fewer goods in the fourth quarter, while services exports fell 1.8 per cent.

Dr Archer said: "This export performance is really disappointing, even allowing for the problems in the eurozone and generally muted global growth, and is a blow to hopes that the economy can rebalance."

The UK's persistent economic weakness has already led to the loss of its prized AAA rating.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk