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Economy shrinks more than previously estimated

The economy shrank by 0.3% during the first quarter of 2012, more than was previously estimated.

Figures released by the Office of National Statistics last month showed a contraction of 0.2%, but the downward revision was attributed to contraction in construction output, which was greater than previously estimated.

There are now further concerns that the UK economy will shrink further in the second quarter of the year, as the Queen’s Diamond Jubilee could reduce output.

Commenting on the figures, IPPR chief economist Tony Dolphin said: “Earlier this week the IMF said that the UK authorities should to take action to support growth ‘if downside risks materialize and the recovery fails to take off’. No more evidence should be needed that the recovery is failing to take off.

“The Monetary Policy Committee should authorise an increase in the scale of quantitative easing at its next monthly meeting and the Chancellor should ease fiscal policy through a temporary cut in national insurance contributions and a boost to infrastructure spending.

“It is too late for contingency planning; it is time for action.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .