BANK ACCOUNTS

Britain in danger of second recession

Britain is in increasing danger of falling into its second recession in just three years, as it was announced today that the economy shrank by 0.2% at the end of last year.

The news poured cold water on the hopes some people had of the UK avoiding the severe economic problems that has blighted much of mainland Europe.

The 0.2% economic contraction in the UK has been put down to the large drop in manufacturing output in the UK in the last quarter.

The Office for National Statistics (ONS) found that factory output dropped by 0.9% in the last quarter. As well as this, activity in the construction industry fell by 0.5%

Unless manufacturing output is increased rapidly, the UK is likely to experience a double-dip recession, which will be bad news for people’s savings and bank accounts.

A second recession is also likely to push up unemployment and cause a lot of companies to go bust, like in much of mainland Europe.

“Everyone is desperate for an economic recovery - it's the only way to create more jobs, higher wages and greater tax revenues to help pay off the deficit,” said Brendan Barber, TUC General Secretary.

“But the government's ill-advised austerity plan killed off hopes of decent growth last year, and the new European-wide austerity experiment looks to set to hold back economies this year too.”

The poor figures suggest that the Bank of England may increase its programme of Quantitative Easing, to help stimulate the economy.

“If the UK doesn't change course it looks like population growth, rather than higher consumer spending or business confidence, is the only thing capable of expanding the economy,” added Mr Barber.

“As the Chancellor approaches one of the most crucial budgets in recent years, he should acknowledge that the dire state of the UK economy requires the government to invest in jobs and to encourage profitable businesses to help stimulate our economy with their growing cash reserves.”

Tags: BANK ACCOUNTS, British finances, Brits money, Euro-crisis, recession, uk economy