Triple-dip recession looms after dire January
Published 13/03/2013 | 04:20
A dire month for manufacturers after output slid by 1.5% during a snow-hit January has deepened the UK's triple-dip recession fears.
The latest gloomy figures from the Office for National Statistics (ONS) put further pressure on the pound, which declined to a new two-and-a-half-year low of 1.48 against the US dollar.
The UK economy contracted by a worse-than-expected 0.3% at the end of 2012 and will return to recession with another decline in the current quarter.
The manufacturing decline, which followed signs of improvement in December, meant overall industrial output dropped by 1.2% in January, dashing City hopes of a better performance over the month.
Other factors behind the fall included closing the Schiehallion oil platform, which drove a 4.3% slide in oil and gas output.
While it is still possible that the services sector could rescue the UK economy in this quarter, the figures increase the pressure on the Bank of England to boost stimulus measures next month.
Most City experts believe there will be more quantitative easing this spring with interest rates at a record low for another two years.
Further signs that UK exporters are finding life tough emerged in separate figures on the UK's trade and goods deficit, which narrowed to £2.4bn in January from £2.8 bn the previous month.
Prime Minister David Cameron's official spokesman said: "I think what you are seeing in recent data releases is that, as the Prime Minister was explaining recently in his speech, we remain in a difficult economic period."