GDP fell 0.3 per cent in the last quarter of 2012. Although markets held relatively steady, the Sterling plummeted, and economists are warning that the UK is in danger of losing its AAA rating:
Charles Levy, senior economist at The Work Foundation:
Following three years of a flat economy, today's GDP figures confirm that our economy is again contracting, raising the prospect of a triple dip recession. 2012 saw considerable improvements in the labour market, with over half a million new jobs created, though many part-time. However, without growth even this improvement will be hard to sustain.
Mark Littlewood, Director General at the Institute of Economic Affairs:
These figures are clearly very disappointing. If the government does indeed have a strategy for growth, it plainly isn't working.
The government's independent forecaster had predicted the economy would be growing by about 2 per cent or 3 per cent by now. In fact, it is flatlining or even slipping backwards into a triple dip recession.
The government is failing to get public spending under control. This year alone, George Osborne will add £4,000 to the national debt for each and every British household. Far from a programme of austerity, the coalition are running up collossal budget deficits.
Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club:
Today's GDP figures are right at the lower end of our expectations. The manufacturing and services figures came in pretty much where we expected them to but the construction outturn is very disappointing in the context of the monthly data that has already been published. Construction output must have collapsed in December to get such a small boost over the quarter as a whole.
The extraction sector also continues to exert a major drag. Where oil production was once a major support to UK activity, the sector is declining rapidly and the Q4 collapse means that output has now fallen by almost 40% over the past five years. This is having a significant impact on the GDP figures, the excluding oil measure is just over 2% short of previous peaks, in contrast to the 3.5% shortfall for GDP.
Nawaz Ali, UK Market Analyst for Western Union Business Solutions:
Britain's bigger-than-expected economic slump may now force the central bank to re-open its stimulus cupboard as soon as next month. Governor King may even reach for something unexpected in order to eliminate the risk of a triple-dip recession.
Meanwhile, Chancellor George Osborne could also bow to pressure from austerity-doves in his March budget update, but will also be well aware that Britain is now a step closer to losing its triple-A ratings crown.
The pound is falling sharply in global currency markets after the figures reinforced views that 2012 was a "lost year" for UK growth.
Frances O'Grady from the TUC:
Today's figures confirm our worst fears that the Chancellor's austerity plan has pushed the UK economy to the brink of an unprecedented triple-dip recession.
We are now mid-way through the coalition's term of office
and its economic strategy has been a complete disaster. The economy has grown by just 1%, real wages have fallen, and the manufacturing and construction sectors have shrunk. We remain as dependent on the City as we did before the financial crash.