Double-dip recession threat as economy shrinks by 0.2%

The UK economy shrank by 0.2% in the last three months of 2011 according to figures released by the Office of National Statistics today, fuelling fears of another recession.

The estimate by the Office for National Statistics is greater than the 0.1% fall predicted by many economic forecasters and follows a 0.6% growth in the July to September quarter which means that the total growth for the year was 0.9%, compared with 2.1% in 2010.

The biggest fall in the last quarter was in the production and manufacturing sector, where output fell by 1.2% between October and December.

Chancellor George Osborne said that the ‘disappointing figures’ were ‘not entirely unexpected because of what’s happening in the world and the eurozone crisis’. He added: ‘Britain has substantial economic problems, debt built up over the past ten years, and we are dealing with those, but the truth is that dealing with those problems is made more difficult by the situation in the eurozone.’