Triple-dip slump fears revived by output slide

 

The UK was on the verge of an unprecedented triple-dip recession after a dire January for the nation’s struggling manufacturers.

Official figures revealed an alarming 1.5 per cent slide for the sector, the biggest slump in output since last June, when an extra day off for the Jubilee celebrations dented the economy.

The news sent the pound tumbling to fresh two-and-a-half-year lows against the dollar as traders bet on the Bank of England pumping billions more into the flatlining recovery.

It also deals a political blow to the Chancellor, George Osborne, a week ahead of a Budget in which he will almost certainly be forced to admit that the deficit is rising due to anaemic growth and the eurozone crisis. The trade union Unite called on him to produce a “game-changing Budget”. The Chancellor promised a manufacturing-led recovery in his 2011 Budget and “a Britain carried aloft by the march of the makers”. Unite assistant general secretary Tony Burke called this pledge“a work of fiction by a poor author”.

The deep decline for manufacturers dragged down Britain’s wider industrial base , which includes sectors such as mining and oil and gas extraction, down 1.2 per cent. As industrial production accounts for almost 16 per cent of overall output, a similar scale of decline in February and March would knock 0.2 percentage points off the wider economy.

Experts warned that the UK would need strong growth from services firms, which account for three-quarters of GDP, to prevent a slip back into technical recession after a poor start to the year for Britain’s building firms. The economy shrank 0.3 per cent between October and December and remains 3 per cent below its pre-recession peak at the beginning of 2008.

Ross Walker, an economist at Royal Bank of Scotland, said: “The slump in January leaves a decline in Q1 GDP looking more likely – at any rate, some combination of upward revisions/rebounds in industrial production alongside a revival in services output will be required to avert a slide back into a technical triple-dip recession.”

The worst decline was in the “other” manufacturing sector, including agricultural, forestry and metal-forming equipment, which saw three-quarters of the fall in industrial production.

As the Chartered Institute for Purchasing & Supply’s manufacturing snapshot slipped to its lowest for four months in February, ING Bank’s James Knightley said: “This sector is going to be a major drag on growth.”

The pound hit $1.4831 against the dollar, the lowest since June 2010, as speculation mounted over another round of quantitative easing from the Bank of England. Sterling also slid against the euro, to €1.1372.

The UK trade gap meanwhile shrank from £8.7bn to £8.2bn in January, but this was due to collapsing imports. The National Institute for Economic and Social Research predicted a 0.1 per cent decline for the economy in the three months to February.

PROMOTED VIDEO
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
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

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz