GDP falls again
By Liz Stephens
There was more bad news for Labour today as the Office for National Statistics (ONS) revealed that the current recession is deeper than previously thought.
The annual drop in output during the period of January to March reached an all-time record of 4.9 per cent new ONS figures showed.
“The biggest three month fall in GDP in more than half a century is a clear sign that we are in a severe recession,” said Lib Dem Treasury spokesman Vince Cable.
“Such a dramatic collapse in growth can only make the public finances worse.
“Rather than making promises on public spending that nobody believes, the government must start taking tough choices on whether it is going to cut spending or raise taxes to bring the economy out of the red.”
Shadow chancellor George Osborne said: “Today’s figures tell us something about the past and the future.
“We hope the recovery comes as soon as possible but sadly we now know this recession has been longer and deeper than we had thought.
“This also means that in the future unemployment will be higher and Labour’s debt crisis will be even worse.”
The revision is one of the biggest ever made by the government agency, which blamed the big revision to its estimate on the construction and services sectors.
Economists had expected a downward revision of the initial estimate of a 1.9 per cent drop in gross domestic product, following a recent revision to construction sector output.
However, the new figures are far worse than expected.
“Average GDP growth in 2009 now looks likely to be -4 per cent or weaker, rather than the -3.5 per cent we previously expected,” said Jonathan Loynes of Capital Economics.
The ONS also revised down its figure for the second quarter of last year to -0.1 per cent from zero, meaning the recession started earlier than previously thought.
Other economists have said that more emphasis should be placed on Purchasing Managers Index (PMI) indicators, which are due to be released in the next three days.
