Economy in double-dip recession

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012.

A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics said.

A recession is defined as two consecutive quarters of contraction. The economy shrank by 0.3% in the fourth quarter of 2011.

Tony Attard, Institute of Directors North West Regional Chairman, said: “Although the fall in GDP in the first quarter was relatively small, the impact on the economy will be much greater because of the knock to consumer and business confidence.

“Confidence has already take a battering from the euro crisis and today’s news means companies are less likely to boost investment and recruitment this year.

“But even though we are back in recession, the IoD does not believe we should slow down on deficit reduction.”

Wednesday's figure is an early estimate and is subject to at least two further revisions in the coming months. It is compiled using 40% of the data gathered for later revisions.

The UK economy was last in recession in 2009.