The UK economy shrank by 0.2% in the first three months of this year, plunging the country back into recession.
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The double-dip recession will result in even more of a squeeze for households up and down the country, many of whom are already struggling with money problems and debt.
The Office for National Statistics (ONS) has revealed that the economy shrank by 0.2% in the first quarter of 2012, meaning the UK is now back in recession.
The technical definition of a recession is two quarters of economic contraction. After the economy’s reduction of 0.3% in the final quarter of 2011, there had been fears that the UK would be plunged back into recession.
Those fears were realised, with a sharp fall in construction output given as the main reason for the contraction.
The ONS said that construction output fell by 3%, while production industry output fell by 0.4% and output in the service sector fell by 0.1%.
The double-dip recession may have only just been officially confirmed, but many have said economic recovery since the first recession has not been seen by most people.
“Whilst the technical recession might have only just returned, unfortunately the people’s recession never really went away,” said Joanna Elson OBE, Chief Executive of the Money Advice Trust.
“Unemployment has been rising, earnings growth has lagged a long way behind inflation, and Government spending cuts mean that welfare benefits have been squeezed.”
The announcement is bad news for the treasury, as its austerity measures have so far failed to boost economic growth.
“It’s a very tough economic situation. It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime – even after the recent fall in unemployment,” said Chancellor George Osborne.