The UK has entered recession following GDP contracting by 0.2 per cent in the first three months of 2012.

The UK has entered recession following GDP contracting by 0.2 per cent in the first three months of 2012.

The latest figure from the Office for National Statistics (ONS) comes after the economy shrank by 0.3 per cent in the fourth quarter of 2011. A recession is defined as two consecutive quarters of contraction.

According to the ONS, the economic slump was driven by the construction sector, which saw output drop 3 per cent in the first quarter of the year, following a 0.2 per cent decline in the previous quarter.

Output of the production industries was down 0.4 per cent in the first three months after a 1.3 per cent decrease in the previous three-month period.

However, output from the services industries was up slightly by 0.1 per cent, a positive result after it dipped 0.1 per cent in the fourth quarter of last year.

John Cridland, director general of the Confederation of British Industry says, ‘This disappointing news comes as something of a surprise. Since the turn of the year, business confidence has improved and, while still challenging, underlying economic conditions also appear to have strengthened.

‘In particular, the weakness of the services sector data does not tally closely with a range of survey indicators suggesting that the sector has been picking up through the first quarter.

Cridland adds that looking forward, there are indications that the economy is slowly recovering from the blow to confidence and activity which resulted from last autumn’s turmoil in Eurozone financial markets.

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