British economy grinds to virtual halt

5th October 2011, Comments 0 comments

Britain's economy slowed to a trickle in the second quarter and the country's last recession was much deeper than thought, official data showed on Wednesday, piling pressure on the government.

British gross domestic product (GDP) -- the value of all services and goods produced in the economy -- grew by just 0.1 percent in the three months to June from the first quarter, the Office for National Statistics said in a statement.

The figure compared with the previous official estimate for growth of 0.2 percent.

GDP growth for the first quarter, or three months to March, was also trimmed to 0.4 percent from a prior reading of 0.5 percent.

"The weakness of growth in both quarters, particularly the second quarter, reflects a number of pressures that are being felt in the wider economy by both business and households," the Office for National Statistics said.

The data sparked fresh speculation that the Bank of England could decide to pump more cash into the economy, at the conclusion of its monetary policy meeting on Thursday.

Britain's growth figures were published amid heightened concern on international markets that the fast-moving eurozone debt crisis and the sluggish US economy could plunge the world into another fierce global downturn.

Following Wednesday's data, Britain's coalition government faced fresh calls to cut back on its deficit reduction programme in a bid to boost economic growth, but Prime Minister David Cameron insisted on sticking to the plan.

"The only way out of a debt crisis is to deal with your debts. That means households -- all of us -- paying off the credit card and store card bills," Cameron was expected to tell his Conservative party's conference on Wednesday.

"It means banks getting their books in order. And it means governments all over the world cutting spending and living within their means," he added in leaked extracts of his speech.

Following Wednesday's growth data, a spokesman for the Treasury said Britain's economy was recovering from the deepest recession of any major economy except Japan.

The ONS also revealed on Wednesday that the 2008/2009 recession was much deeper than previously thought -- but ended three months sooner than first estimated.

"Although shorter (than expected), the downturn is now estimated to have been deeper than previously published, with a peak-to-trough fall of 7.1 percent, rather than the 6.4 percent previously estimated," it said.

Britain actually emerged from recession in the third quarter of 2009, rather than during the final three months as previously thought.

Britain's economy meanwhile limped through the second quarter amid a sharp 0.8-percent drop in consumer spending and a 1.2-percent slide in the production industries.

The ONS noted that changes in calculation methods added to the downward revisions.

"Growth in the first and second quarters of 2011 have both been revised down by 0.1 percentage points. This is due to a combination of methodological changes, classification changes and the inclusion of new data," it said.

© 2011 AFP

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