The United Kingdom has confounded expectations by sliding back into recession, according to official figures revealing that even the painfully slow recovery eked out since the 2008-'09 economic crisis has disappeared. And analysts say Prime Minister David Camerons government has few good options available to spur recovery.
Wednesdays numbers show the U.K. entering double-dip territory where the economy suffers a new recession before output has recovered from the last one for the first time since the crisis years of the 1970s.
This is a worse performance for the economy than the Great Depression of the 1930s, said George Buckley, chief U.K. economist at Deutsche Bank in London. Fiscal austerity, private sector debt reduction, European sovereign uncertainty and sticky inflation all present challenges to the recovery.
The 0.2 percent fall in output for the first quarter of this year, which followed a 0.3 percent decline in the previous three months, shocked many economists in the City of London most of whom had predicted a small rise. Several responded by suggesting the precipitous 3 percent fall in construction activity the main driver behind the overall decline for the economy as a whole might be revised in future months to show a less severe slide.....