1 Jul 2009

UK economy contracts

6:58 am on 1 July 2009

The British economy contracted 2.4% in the first quarter of 2009, according to the latest official data.

The decline was the worst in 51 years and more severe than an earlier estimate of a 1.9% fall. It was worse than expected.

The Office for National Statistics blamed the revision primarily on weaker output in the construction and manufacturing sectors.

It also said the recession started earlier than first thought last year. The ONS now says the recession began during the second quarter of 2008 rather than during July to September, so that the recession has now been running for a whole year.

The ONS said economic output shrank 4.9% during the first quarter of 2009 compared with the first quarter of 2008, the biggest year-on-year fall on record.

The BBC reports the figures will make it more difficult for the Treasury to reach its forecast in the Budget in April, of a 3.5% decline in the economy for the year.

January to March's quarterly 2.4% decline has not been exceeded since the second quarter of 1958, when the economy shrank by 2.6%.

However, the decline was equalled by figures from the first quarter of 1974 and the third quarter of 1979, which also saw contractions of 2.4%.