UK sinks into double-dip recession

UK economy shrank by 0.3% in the fourth quarter of 2011 and by 0.2% in the first three months of 2012. UK is now technically back in recession. A recession is defined as two consecutive quarters of contraction and is accepted by many economists.

Economists had expected the Office for National Statistics data to show the economy grew by 0.1pc between January and March.

The UK economy last entered recession in 2008, and emerged from it in the third quarter of 2009 after five successive quarters of economic contraction. It has been bumping along the bottom for more than a year and is still struggling to gain momentum. Finally it slid back into recession – a double- dip recession.

Quarter	Growth rate(%)
2008 Quarter -2	-0.3
Q3	-0.9
Q4	-2.0
2009             Q1	-1.6
Q2	-0.2
Q3	0.2
Q4	0.7
2010             Q1	0.4
Q2	1.1
Q3	0.7
Q4	-0.5
2011             Q1	0.2
Q2	-0.1
Q3	0.6
Q4	-0.3
2012             Q1	-0.2

Markit analyst Chris Williamson described the report as "an ultra-gloomy picture of an economy that is struggling against the headwinds of deficit-fighting austerity measures, high inflation, weak pay growth, 8.3% unemployment and constrained credit, not to mention the ongoing financial crisis in its main export market, the Eurozone."

The Bank of England has warned that there is a risk of another contraction in the second quarter of 2012.
 "This is the worst recession/recovery cycle of the last 100 years," said Michael Saunders, an economist at Citigroup.

The U.K. is the eleventh EU member country to have entered recession. Nine of those were in recession in the fourth quarter of last year. The U.K. has been joined by Spain in entering recession in the first quarter. European countries now officially in recession: UK, Greece, Italy, Portugal, Ireland, Belgium, Denmark, Holland, Czech Republic, Slovenia and Spain.

Prime Minister David Cameron said the figures were "very, very disappointing". The UK government says it won't swerve from austerity despite the country going back into recession.

 "There is no complacency at all in this government in dealing with what is a very tough situation, which frankly has just got tougher."

He said it was "painstaking, difficult" work, but the government would stick with its plans and do "everything we can" to generate growth.

Labour leader Ed Miliband said the figures were "catastrophic" and asked Mr Cameron what his excuse was.

"This is a recession made by him and the chancellor in Downing Street. It is his catastrophic economic policy that has landed us back in recession," Mr Miliband said.

US Jobs lost and gained from January 2008 through December 2011

US Jobs lost and gained from January 2008 through December 2011

The great recession that began in December 2007 ended in June 2009 marking the beginning expansion. The recession lasted 18 months. It is the longest of any recession since World War II. The Business Cycle Dating Committee of the National Bureau of Economic Research determined that the recession ended in June 2009 and a recovery started in that month

	2008	2009	2010	2011
January	-10,000	-779,000	14,000	68,000
February	-50,000	-726,000	39,000	235.000
March	-33,000	-753,000	208,000	194,000
April	-149,000	-528,000	313,000	217,000
May	-231,000	-387,000	432,000	53,000
June	-193,000	-515,000	-175,000	20,000
July	-210,000	-346,000	-62,000	127,000
August	-334,000	-212,000	-57,000	104,000
September	-458,000	-225,000	-24,000	210,000
October	-554,000	-224,000	210,000	112,000
November	-728,000	64,000	93,000	157,000
December	-673,000	-109,000	152,000	203,000
Total	-3,623,000	-4,740,000	1,143,000	1,700,000

8,363,000 jobs were lost during 2008 and 2009. Only in November 2009 a gain of 64,000 was reported. In 2010 and 2011 only 2,843,000 were added.

There are 5,520,000 fewer jobs today than there were at the start of the recession. Adding the 4,800,000 jobs needed to account for the normal growth in the working-age population, the jobs deficit comes to 10,320,000. Even at January’s job growth rate (243,000) it would still take about seven more years — until around 2019 — to fill the gap and get back to the pre-recession unemployment rate. To get back to 2007 rate in 5 years 272,000 jobs on average need to be created every month till the end of 2016.

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