By Mark Smulian | 5 October 2011
Economic growth was lower than expected in the second quarter of this year, dashing hopes of any easing of the spending squeeze on the public sector.
In figures published today, the Office for NationalStatistics said UK gross domestic product increased by 0.1% between April and June, half the 0.2% it had earlier estimated.
Output by the industrial, services and construction sectors all increased slightly, but household consumption fell by 0.8% against the previous quarter.
Simon Perry, an economist at the National Institute of Economic and Social Research told Public Finance: ‘The figures are undoubtedly disappointing, it means there has been almost no growth for the last nine months.’
He said any easing of the pressure on public finances depended on rising tax revenues from economic growth, but ‘things look very difficult, we may not be technically in a recession but people do not perceive any growth’.
The usual definition of recession is two consecutive quarters of contraction.
Tony Dolphin, senior economist at the Institute for Public Policy Research, said the poor figures made it likely that the Bank of England would embark this week on a further round of quantitative easing, the creation of money in a bid to stimulate the economy.
‘There have been three quarters of almost no growth and there is a worrying effect on the consumer side from higher VAT rates and oil and food prices,’ he said.
‘George Osborne has said he is not going to change his fiscal policy, so these figures make more quantitative easing more likely.’
