UK recession is deeper than first thought says ONS

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The Independent Online

The UK's recession is deeper than first estimated, the Office for National Statistics revealed yesterday.

The ONS confirmed that the economy shrank by 0.3 per cent in the first quarter, pushing Britain into its first double-dip recession since the 1970s. But it also revised up the contraction of the economy in the final quarter of 2011 from 0.3 per cent to 0.4 per cent, deepening the downturn.

Households' disposable incomes fell again in the first three months of this year emphasising the financial squeeze on families, official figures showed. Incomes were down 0.9 per cent in the quarter from the previous three months of the year, after falling by the same amount in the final quarter of last year.

The ONS revised up its estimate of the decline in construction in the first quarter from 4.8 per cent to 4.9 per cent. The fall in industrial production also increased from 0.4 per cent to 0.5 per cent.

However, this was offset by some slightly better news from the services sector, which was said by the ONS to have risen by 0.2 per cent over the quarter, more than the previous 0.1 per cent estimated.

Though household incomes fell, the savings ratio declined to 6.4 per cent in the first quarter, down from 6.9 per cent.

Meanwhile a survey of lenders by the Bank of England showed the cost of credit for small businesses and households has jumped as banks have passed on their own higher cost of funding to their customers. Small and medium-sized firms have seen their borrowing costs rise "significantly", according to the Bank's quarterly Credit Conditions Survey.