By a Newsnet reporter
Official figures released by the Office for National Statistics (ONS) have revealed that the UK economy shrank by one third more in the fourth quarter of 2011 than originally believed.
Newly revised figures reveal that UK GDP contracted by 0.4% at the end of 2011 and not the 0.3% originally predicted.
The revision follows a similar correction for the first quarter of 2012, which was initially estimated to have shrunk by 0.2%, but was later revised to 0.3%. The double dip meant the UK economy officially entered its second recession at the start of this year.
This revised figure shows that the UK’s recession is now worse than was originally thought. The news comes after it was revealed earlier this week that public sector borrowing was £2.7bn higher in May this year than it was in 2011.
“No amount of extenuating circumstances can mask the economy’s serious weakness in the first three months of the year,” said analyst Ranvir Singh.
Speaking to FreshBusinessThinking, the CEO of the market analysts RANsquawk added: “All eyes will now turn to the Bank of England to see how it will respond. But the sages of the MPC [Monetary Policy Committee] are far from united in their approach.
“The Bank’s Chief Economist, Spencer Dale, most recently said he wants more stimulus and that the BoE should explore measures to improve the flow of bank credit.”
Analysts are now predicting that the Treasury will be forced to print even more money in an attempt at addressing Britain’s bleak economic outlook.
This week, BoE Chief Sir Mervyn King warned that the UK economy was in crisis and faced at least another five years before seeing any signs of improvement.
Chancellor George Osborne is coming under increasing pressure to change direction and release funds for capital building projects. Figures from the last quarter show that the UK construction industry took a massive hit with April showing a drop of 13% on the previous month.
The Scottish government this week renewed their calls for £300 million of funding for 30 ‘shovel ready’ projects, which they say will create over 4000 jobs.
Only yesterday, Scottish Finance Secretary John Swinney announced an injection of £105 million in an effort at boosting the Scottish economy in the face of the wider UK recession.