Belfast Telegraph

Celebrating Queen's Jubilee 'kept the country in recession'

By Jamie Grierson

The additional bank holiday for the Queen's Diamond Jubilee kept the economy in its double-dip recession in the second quarter of the year, a think-tank has said.

Gross domestic product (GDP) is estimated to have declined 0.2% between April and June, the National Institute of Economic and Social Research (Niesr) said, after official declines of 0.3% and 0.4% in the previous two quarters.

Niesr said had it not been for the extra bank holiday granted for the royal celebration on June 5, GDP would have grown 0.2% in the three-month period.

Niesr, which is independent from party political interests and receives no core funding from government, added: "Nevertheless, these figures suggest that the UK economy remains broadly flat, a trend that has persisted for around 24 months."

Some analysts have previously warned that the net effect of the Diamond Jubilee celebrations would be detrimental to economic growth as the loss of output overshadows any gains in the leisure and tourism sectors.

The estimates will heap more pressure on the Government and fuel criticism that Chancellor George Osborne's austerity measures are choking off the recovery.

The official estimate for the second quarter will be published by the Office for National Statistics on July 25.

Rachel Reeves, Labour's shadow chief secretary to the Treasury, said: "These are very concerning and disappointing forecasts. With the economy having already shrunk over the last 18 months, it would be yet another damaging blow to the Government's economic credibility if they were to come true. Britain is one of only two G20 countries in a double-dip recession, long-term unemployment is soaring and so borrowing is now going up."

The decline in the first quarter of 2012 was driven by a weak performance from construction which declined by 4.9%, its worst performance since the first quarter of 2009.

Industrial production sector output, which includes manufacturing, declined 0.5%, while the service sector, which makes up 75% of the economy, eked growth of 0.2%.