The U.K. economy shrank in the first quarter as a slump in construction pushed Britain into its first double-dip recession since the 1970s.
Gross domestic product fell 0.2 percent from the fourth quarter of 2011, when it declined 0.3 percent, the Office for National Statistics said today in London. The median of 40 estimates in a Bloomberg News survey was for an increase of 0.1 percent. A technical recession is defined as two straight quarters of contraction.
Rising energy prices, government spending cuts and anemic wage growth are squeezing consumers, creating a drag on the recovery. Pay growth slowed to 1.1 percent in the three months through February, less than a third of the inflation rate. An extra public holiday in June to mark Queen Elizabeth II’s 60 years on the throne may also depress economic output in the second quarter.
It was 1975 when Britain last experienced consecutive drops in GDP before the economy had recovered output lost in the previous recession, the definition of a double-dip recession. U.K. Treasury forecasters and the International Monetary Fund predict the U.K. economy to grow 0.8 percent this year, the same as last year.