The UK’s economy has slipped into a ‘double-dip’ recession, the first for 37 years. But does this mean anything to you and me, and will it affect your spending and saving habits?
Yesterday, the Office for National Statistics (ONS) announced that Britain had gone back into recession, exactly three years after it had pulled itself out negative economic growth.
The economy had shrunk by 0.2% in the first quarter of 2012. And since it had also fallen in the previous quarter, by 0.3%, we’re now back in a recession (two consecutive quarters of negative growth technically equal a recession).
The ONS said that weak output from Britain’s production industries had a major factor in the fall, while a 3% reduction in construction was another contribution. Output, which includes retail and consumer spending, increased marginally by 0.1%.
Does the double-dip mean double trouble?
But, quite frankly, does this mean anything to you or me? Our sluggish economy has been dragging its feet for over a year now. Just look at the statistics from the end of 2010 to 2011:
- Q4 2010, the economy fell by 0.5%
- Q1 2011, the economy grew by 0.2%
- Q2 2011, the economy fell by 0.1%
- Q3 2011, the economy went up by 0.6%
The final quarter of 2011 saw the economy starting its decline towards today’s sorry state of affairs – the so-called double-dip.
None of the nation’s economic output indicates any form of recovery – some economists are even predicting that 2012 could be a lost year for the British economy. It all sounds like pretty bad news doesn’t it?
But is it any worse than what we’re currently facing? Savers still can’t get a decent rate of return on their nest-eggs, investors are being tossed about in bumpy stock markets, first-time buyers face rising rates, and all of us are dealing with high energy prices.
So, recession or no recession, we’re all still in a financial pickle. And if the economy keeps dancing around, it won’t make a blind bit of difference to our personal finances.
A more positive outlook
There may be some glimmers of hope. The ONS calculated our economic output using just 44% of the data available. In a few weeks time it will collect the rest and make a revision to the growth figure. And other companies, like the British Chamber of Commerce, think the outlook for the UK is actually far more positive than the latest figures suggest.
But whatever the case, is your confidence affected by the double-dip? Are you worried that things are going to get worse now we’re back in a recession?
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