The UK economy shrank in the first quarter of 2009, in the biggest contraction since 1979 as manufacturing and business services posted record falls. UK business services and finances fell 1.8 per cent, the most since records for the category began in 1983. Manufacturing contracted 6.2 per cent, the most since at least 1948.
Gross domestic product (GDP) fell 1.9 percent after declining 1.6 per cent in the previous quarter, the Office for National Statistics (ONS) said today in London. The economy has now failed to grow for a year.
This is the first time GDP has contracted by more than 1 percent for two consecutive quarters since modern records began after World War II.
Chancellor of the Exchequer Alistair Darling said in his Budget speech on Wednesday, that the UK economy will contract about 3.5 per cent this year, and rebound with a 1.25 per cent recovery in 2010. Within minutes of his speech ending in London, the International Monetary Fund (IMF) published a forecast in Washington, showing a UK GDP drop of 0.4 per cent in 2010 after shrinking 4.1 per cent in 2009.
The volume of output in the production industries is estimated to have decreased by 5.5 per cent in the first quarter. Manufacturing output decreased by 6.2 per cent. Mining and quarrying decreased by 3.4 per cent and Electricity, gas and water supply fell by 1.9 per cent.
Output within construction decreased by 2.4 per cent compared with a decrease of 4.9 per cent in the previous quarter. The ONS said it should be noted that the output survey results used to compile more complete estimates are not available at this stage and the preliminary results are based on a smaller survey of changes in the balance of activity in the industry.
Output of business services and finance decreased by 1.8 per cent, compared with a decrease of 0.5 per cent in the previous quarter. Other business services made the largest contribution to the reduction in output.
This industry made the largest contribution to the reduction in the level of total services output and contributed most to the increased rate of reduction.
Output growth of government and other services increased by 0.5 per cent, compared with a decrease of 0.3 in the previous quarter. Health and social work made the largest contribution to the increase.
