The British economy shrank in the first quarter at its sharpest rate since the early days of former British prime minister Margaret Thatcher’s government 30 years ago as the financial crisis continued to wreak havoc on banks, retailing and manufacturing.
In its first estimate for the January-March period, the Office for National Statistics said yesterday that GDP contracted by a massive 1.9 percent from the previous three-month period — the biggest drop since 2.4 percent posted in the third quarter of 1979.
That was far more than the 1.6 percent decline posted in the fourth quarter of last year and above analysts’ expectations for a more modest 1.4 percent drop.
The latest decline means that Britain’s economy has shrunk for three consecutive quarters and there are very few indications that things will improve in the near future.
Compared with a year ago, Britain’s GDP was 6.2 percent lower in the first quarter, compared with the 4.9 percent year-on-year decline seen in the fourth quarter of last year.
Earlier this week, the British government laid out the hope the economy would start to grow towards the end of this year but still forecast that output this year would shrink by a post-World War II record of 3.5 percent.
A more detailed look at the figures shows that the weakness in the economy was broad-based, with both services and manufacturing output sharply down.