Triple-dip recession fears grow as economy shrinks

BRITAIN remains on the brink of a triple-dip recession today after figures confirmed the economy contracted by 0.3% at the end of 2012.

The Office for National Statistics (ONS) stuck by its previous estimate for the fourth quarter, although it now thinks the UK economy grew by 0.3% across the whole of last year, rather than previous guidance of 0.2%.

GDP figures for the current quarter are due to be released at the end of April, with the recent cold weather increasing the chances of two successive quarters of contraction, which would represent a return to recession.

The country’s stagnant performance reflects a fall in industrial production of 2.1% in the fourth quarter - including a 10.7% slump in mining and quarrying - and the biggest fall since the first quarter of 2009.

However, household spending in the fourth quarter increased by more than previously thought, up 0.4% from an earlier 0.2% reading. Total disposable incomes rose by 2.1% during the year as a whole, but slipped back 0.1% in the fourth quarter.

IHS Global Insight economist Howard Archer said: “It looks touch and go whether the economy can avoid further contraction in the first quarter of 2013, and hence a ‘triple-dip’ recession.”

He said heavy snowfall, which has hit parts of the UK in recent days, increased the chances of another quarter of falling output.

Marginal growth of 0.3% in 2012 compared with 1% in 2011.

The figures also showed a household savings ratio of 7.1%, the highest since 1997, as people choose to save rather than spend. This figure was boosted by a £20.1 billion increase in wages and salaries versus 2011.