Figures released today by the Office for National Statistics (ONS) reveal that the British economy shrank by 0.7% between April and June 2012.
This is the third successive quarter that gross domestic product (GDP) – the measure for economic growth – has fallen. It follows a contraction of 0.3% in the first quarter of the year and means that the UK is still in the grip of a double-dip recession, the first since the mid-1970s.
Which? executive director Richard Lloyd said: ‘Today’s shocking GDP figures are further evidence of what hard-pressed consumers know only too well, that we are in the midst of the biggest financial squeeze since the 1920s.’
What is to blame for the lack of economic growth?
The ONS found that a weak output by the construction sector was the biggest contributing factor to this quarter’s fall in GDP. It decreased by 5.2% compared with the first quarter of 2012, while output by production industries dropped by 1.3%.
Bad weather and the loss of a day’s work over the Diamond Jubilee weekend may also have affected economic growth, but the ONS is not yet able to assess how great an impact these events have had.
Bleak outlook for UK consumers
Richard Lloyd said: ‘Our Consumer Report found Britons are among the most economically vulnerable consumers in Europe, with people’s ability to save at rock bottom and personal debt levels sky high.’
‘Alarming numbers of people say they are forced to take on new forms of debt just to make ends meet, and many more say they would not cope with unexpected shocks to their incomes or household bills. Three quarters of the British public describe the UK economy as ‘poor’ and half of the population believe it will only get worse over the coming 12 months.’
‘The Chancellor needs to get money back in people’s pockets to help households who are struggling to cope with rising fuel, energy, mortgage and food costs. That’s what will really boost consumer confidence and spending power, which is essential for getting sustainable growth going in the economy.’