UK recession confirmed as GDP falls 0.3%
The fall was in line with estimates, and means the UK is officially back in recession following a 0.3% decline in Q4.
The main cause of the decline in Q1 was down to the manufacturing and production industries.
Output of the production industries fell 0.5%, while manufacturing output shrank by 0.3%, a worrying sign given the coalition government’s plans to grow the economy out of recession by re-building the UK’s manufacturing industry. The fall in GDP comes against a backdrop of global economic woe.
The eurozone crisis continues to impact Europe’s trading partners globally, with the Bank of England expected to expand QE soon to counter the headwinds and try to generate inflation.
CPI inflation fell to 2.8% in May, and could well fall below the 2% target if the economic downturn persists.