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UK back in recession after 0.2 pct Q1 contraction
UK officially back in recession after 0.2 percent Q1 contraction
By The Associated Press

LONDON (AP) ' Britain's economy has fallen back into recession for the first time since 2009 after official figures Wednesday showed that it unexpectedly contracted during the first three months of the year.

The Office for National Statistics said economic output as measured by gross domestic product fell by 0.2 percent in the first three months of the year from the previous quarter. The first quarter drop follows the 0.3 percent decline recorded in the last quarter of 2011 and means Britain has returned to recession ' two consecutive quarters of negative growth are required for a country to be officially deemed to be in recession.

The first quarter decline was unexpected ' the consensus in the markets was that the British economy eked out modest growth of 0.1 percent.



"The government and the Bank of England needed a sharp shock. They just got it," said Marcus Bullus, trading director at MB Capital in London.

Treasury chief George Osborne said the eurozone crisis has impeded Britain's recovery, but he said he would stick to his "credible plan" to cut budget deficits.

A more detailed look at the official data shows that a 0.1 percent in Britain's big services sector was not enough to offset a 3 percent in construction and 0.4 percent in production industries including manufacturing and energy production.

Though there have been some concerns raised over the way construction output in particular is measured,

Vicky Redwood, chief U.K. economist at Capital Economics, said she would not dismiss the official data.

"Even if the underlying picture is stronger than the official GDP figures show, there is no guarantee that the recent pickup will continue," Redwood said. "Indeed, we remain comfortable with our view that GDP will contract by about 0.5 percent this year."

That prediction contrasts with the government's expectation for 0.8 percent growth this year.

Britain suffered a deep, 18-month recession which ended in the last quarter of 2009. The recovery, however, has been fitful. Last year, growth was negative in two quarters.

Wednesday's figure is subject to revision.


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