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UK on course for triple-dip recession despite rise in construction

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UK on course for triple-dip recession despite rise in construction

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Published by Jon Land for 24dash.com in Central Government and also in Housing

UK on course for triple-dip recession despite rise in construction UK on course for triple-dip recession despite rise in construction

The UK economy shrank by 0.3% in the last three months of 2012 despite an increase in construction output.

The figures from the Office for National Statistics (ONS) put the economy on course for a triple-dip recession, although Chancellor George Osborne insists the Government will not change its approach.

Ahead of the publication of the GDP figures, Osborne was reported to have enjoyed a "lively dinner" with David Cameron and Boris Johnson last night in Davos, the host city for the World Economic Forum.

Greenpeace's head of media Ben Stewart, who was in the same restaurant, tweeted a picture of the gathering with the comment: "Cameron, Osborne and Boris having a loud dinner at Davos. Either GDP figures are great or they don't give a shit."

According to the ONS, there has not been a triple dip recession since its records began in 1955, with Britain last suffering such economic gloom in the Great Depression.

On a positive note, construction sector output increased by 0.3% on the previous quarter following a decrease of 2.5% between Q2 and Q3.

The ONS indicated the fall in output was largely due to a drop in mining and quarrying, after maintenance delays at the UK's largest North Sea oil field.

The economy had grown by 0.9% in the previous quarter, boosted by the London 2012 Olympic Games. But for the whole year, growth was flat.

The ONS said that the "bumpy economy" was on a "sluggish trend".

Manufacturing fell by 1.5% in the fourth quarter, while the services sector was flat.

Within the manufacturing sector, mining and quarrying output fell by 10.2%, the biggest decline since records began in 1997, driven by disruption to North Sea oil and gas fields.

Commeting on the figures, Noble Francis, Economics Director at the Construction Products Association, said: "The GDP figures released today show that the final quarter of last year was extremely difficult with the construction industry 11% lower then a year ago. Recent figures for new orders, which are a forward looking indicator for the industry, were 7% lower than a year ago and as a consequence the coming year is likely to see further contraction from what is already a very difficult position.

"We welcome the Deputy Prime Minister’s acknowledgement today for more investment in infrastructure, as this is something the industry has been calling for, for two years. However, he must turn this sentiment into real activity if we are not to experience further decline across the industry and the wider economy for many months to come."

Howard Archer of IHS Global Insight, said: "With the economy suffering a renewed GDP dip in the fourth quarter of 2012, the definition of the current state of the UK economy as DIRE needs to be amended from Disappointing Inflation Rotten Expansion to Disappointing Inflation Reduced Economy

While we believe the economy is essentially flat at the moment, it is worrying to note that GDP in the fourth quarter of 2012 was 3.3% below the peak level seen in the first quarter of 20108. We suspect that GDP will not return to the level seen in the first quarter of 2008 until the first half of 2015 - a gap of seven years.

Today's ONS figures are the first estimate of how the economy performed in the fourth quarter, and are subject to at least two further revisions as further data is collected.

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