UK Gross Domestic Product (GDP) shrank by 0.2 per cent in the last quarter of 2011, the latest figures from the Office for National Statistics (ONS) have revealed.
This is the first time the economy has seen negative growth since the last quarter of 2010 when GDP shrunk by 0.5 per cent. Two consecutive quarters of negative growth is the UK’s definition of recession.
According to the statistics, the contraction was driven by a 1.2 per cent decrease in output of the production industries, and a 0.5 per cent fall in construction sector output.
Commenting, John Maltby, group director, Commercial, Lloyds Banking Group said: “Small businesses were reporting slower growth in the last quarter of 2011, so this contraction in GDP is not unexpected. However our most recent figures, from December’s Purchasing Manager’s Index, show that there was a slight upturn in business activity at the very end of last year.
“Clearly economic conditions remain challenging, but there is strong evidence that some businesses are more worried about the economy than is justified by their own performance. The reality is that there are still opportunities open to small and medium sized enterprises, not least those connected to London 2012 and through resilient export markets. If the economy is to recover, and if confidence is to be restored, these are opportunities that businesses must grasp quickly.”
Meanwhile, UK sovereign debt surpassed the £1 trillion mark for the first time in history, despite the fact that the Treasury is making good progress on reducing the deficit.