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The UK economy looks set to enter a triple-dip recession from following GDP fall.
The UK economy faces entering a third recession following the announcement of a 0.3% contraction in UK GDP figures during the fourth quarter of 2012.
Responding to the GDP figures Chancellor of the Exchequer George Osborne stated that “we have a reminder today that the UK faces a very difficult economic situation”, citing the country’s debt and problems in the Eurozone economy as factors for the contraction that still need to be resolved.
The Office for National Statistics (ONS), who are responsible for calculating the UK’s official GDP figures, argues that the contraction is a result of a 10.2% reduction in mining and quarrying activity following a period of maintenance delays at North Sea oil fields.
Following 0.9% growth during Q3, attributed to an Olympic boost, today’s figures mean that in total the UK economy saw zero growth throughout 2012. The ONS commented that the economy had suffered from a “sluggish trend”.
If mining and quarrying were excluded from the overall figure then the economy would have shrank by 0.1%.
Deputy Prime Minister Nick Clegg has argued that the government’s reduction in capital spending is a factor in the lack of growth in the economy. Speaking before the GDP figures were announced Mr Clegg said “I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible”.
“The economic evidence is overwhelming. It helps create jobs now – people go onto construction sites. It raises the productive capacity of the economy in the longer run”. Mr Clegg’s remarks are the first time a senior cabinet minister has openly questioned the government’s economic programme since it was formed in May 2010.
In a statement the Treasury commentated that the figures “confirms what we already knew – that Britain, like many European countries, still faces a very difficult economic situation” but they still insist that whilst the country is on a difficult road “the economy is healing”.
