While a lot of analysts and watchers are convinced that the U.K is in a deep recession, it has been established that many people are not aware of the degree to which the recession has hit the U.K. Official figures on Wednesday revealed that Britain was submerged in a deep recession- nothing close to what people had earlier imagined.
This news heightens pressure on the government to slow down on its no-nonsense austerity approach.
Britain’s office of National Statistics confirmed that Britain’s economic output had reduced by 0.7 percent in the April-June quarter. This dip in performance now confirms that the recession has outgrown into the third quarter, underscoring the seriousness of the situation. The main reason why this decline has raised alarms is because it’s worse than economists’ expectations. Economists expected the decline to come in at 0.2 percent.
The statistics office reported that the probable reason underlying the disappointing performance was the extra day holiday in June, to commemorate the 60 year rule of Queen Elizabeth the second.
While the situation may be understandable, it will not spell well for the current government. Having only been elected into power 2 years ago, the current government is still young. When entering into power, its rallying call with regards to economical matters was cutting back on the bulging deficit. It now has to grapple with endless criticism from all corners, as the opposition in particular argues that the prevailing approach has choked the British economy.
George Osborne, the British Treasury Chief, puts the blame on debts accumulated by the previous labor government. He also noted that the Eurozone woes added a shade of gloom to Britain’s situation. “We all know the country has deep-rooted economic problems, and these disappointing figures confirm that,” he added.
Scott Corfe, a senior economist at the center for Economic and Business research, shared his insight on the matter. “We don’t expect much policy response from government after today’s news, though pressure will grow for a change of direction,” he noted.
Last week however, the International Monetary Fund said that David Cameron’s government needed to ease up on its budget cut in the event that the economy failed to rebound. In addition to that, the IMF also cut its growth projections from 0.8 percent to 0.2 percent.
While unemployment has eased 8.1 percent in the last report, all sectors seem to have recorded a dip in performance. The current situation suggests that Britain still has a long way to go in its attempt to put the four year recession behind its back