London: Britain’s economy contracted by 5.6 percent over the past year as the country’s GDP showed a fall for the fifth straight quarter, the government data revealed.
Dashing hopes that the steepest decline in growth since the 1930s might be nearing an end, the Office for National Statistics said gross domestic product fell by 0.8percent in the three months to June, The Guardian reported.
The size of the drop surprised the City, which had expected only a 0.3percent decline following recent signs of a pickup in the housing market and strong growth in high street spending.
Some economists had even predicted that the UK could post its first positive growth since early 2008, and the size of the decline prompted immediate speculation that the Bank of England would be forced into fresh emergency action to kick-start activity.
While the pace of decline in GDP slowed from the 2.4percent seen in the first three months of 2009, the economy has suffered a cumulative contraction of 5.7percent in the past five quarters. The ONS said this was double the drop in the recession of the early 1990s and almost as big as the 6.4percent retrenchment during the 1980-81 slump. The 5.6percent drop in GDP over the past year has not been matched since comparable records began in 1955.
A breakdown of the figures showed business services and finances, a sector that has boomed for much of the last decade, accounted for more than a quarter of the GDP decline in the second quarter.
Overall, services fell by 0.6percent on the quarter and by 3.8percent on the year.
Alistair Darling, the chancellor, has predicted that the economy will return to growth by the end of the year.
Bureau Report
First Published: Friday, July 24, 2009, 16:27