Britain's economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron's embattled coalition government.
Chancellor of the Exchequer George Osborne holds Disraeli's original budget box as he leaves 11 Downing Street for Parliament.
The Office for National Statistics said Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 after contracting by 0.3 percent at the end of 2011, confounding forecasts for 0.1 percent growth.
Most economists had expected Britain's $2.4 trillion economy to eke out modest growth in the early 2012, but these forecasts were upset by the biggest fall in construction output in three years coupled with anaemic service sector growth and a fall in industrial output.
Wednesday's figures will be a deep blow for Britain's Conservative / Liberal Democrat coalition, which has slid in opinion polls since a poorly received annual budget statement in March and risks embarrassment at local elections on May 3.
The government is also under pressure over revelations about its close relationship with media tycoon Rupert Murdoch.
The government desperately needs growth to achieve its overriding goal of eliminating Britain's large budget deficit over the next five years.
Britain's economy contracted by 7.1 percent during its 2008-2009 recession and recovery since has been slow, with headwinds from the euro zone debt crisis, government spending cuts, high inflation and a damaged banking sector.
Wednesday's data showed that output was still 4.3 percent below its peak in the first quarter of 2008, and the economy has only grown by 0.4 percent since the government came to power in the second quarter of 2010.
Output in Britain's service sector - which makes up more than three quarters of GDP - rose by just 0.1 percent in the first quarter after falling 0.1 percent in Q4 2011, kept down by a fall in output in the large business services and finance sector.
Industrial output was 0.4 percent lower, while construction - which accounts for less than 8 percent of GDP - contracted by 3.0 percent, the biggest fall since Q1 2009.
Britain's Office for Budget Responsibility forecasts growth of 0.8 percent this year.
Wednesday's data shows that first quarter output was no higher than a year earlier.
The Bank of England has warned that there is a risk of another contraction in the second quarter of 2012, due to an extra public holiday.
But unlike during the previous two quarters, it does not appear keen to provide further monetary stimulus through quantitative easing asset purchases, due to above-target inflation which looks stickier than before.
The BoE, and a number of private-sector economists, had argued before Wednesday that the underlying health of Britain's economy was stronger than ONS data suggested, due to relatively upbeat private-sector surveys and a fall in unemployment.
The ONS's preliminary estimates of GDP are the first released in the European Union, and are based partly on estimated data.
On average, they are revised by 0.1 percentage points up or down by the time a second revision is published two months later, but bigger moves are not uncommon.
- Bloomberg reports U.K. Plunges Into Double-Dip Recession, as does CNBC, UK Back Into Recession in First 'Double Dip' Since 1970s (zerohedge.com)
- | Borrow + spend backfiring as construction declines: UK economy in double-dip recession! (truthaholics.wordpress.com)
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- UK News: Surprise contraction in economy sends UK back into recession (walesonline.co.uk)
- UK double-dips for first time in 37 years; Balls: Government's economic credibility "in tatters" (leftfootforward.org)
- Britain in double-dip recession as growth falls 0.2pc (refreshingnews99.blogspot.com)
- Britain in double-dip recession as growth falls 0.2pc - Telegraph.co.uk (telegraph.co.uk)
- Britain falls back into recession (theglobeandmail.com)
- Official: Britain staggers into double-dip recession doom (go.theregister.com)
Yechte Consulting finalises the web development for an Art Gallery in Brussels and New-York.
Charles Riva Collection is a private, contemporary art collection situated in a beautiful 19th century townhouse in the center of Brussels. The space officially opened on April 24, 2009 with an exhibition of work by Jim Lambie. There will be two-to-four exhibitions throughout the year that will feature solo and group shows of work by artists collected over the years by Charles Riva. Charles Riva Collection is open on Thursdays - Saturdays 13h-18h30 and by appointment.
Yechte Consulting finalises renders for a private spa in the United Kingdom.
March saw the strongest upturn in new construction orders since September 2007, four and a half years ago.
The monthly survey of construction industry purchasing managers reports a marked expansion of UK construction sector output, with the rate of growth accelerating for a second successive survey period and confidence strengthening.
The seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index (PMI) posted 56.7 in March. Up from 54.3 in February, the index has now posted above the 50.0 no-change level that separates growth from contraction in each month since January 2011. Moreover, the latest reading pointed to the sharpest expansion of output in 21 months.
Growth was registered across all three of the broad construction categories monitored – housing, commercial and civil engineering. Commercial was again the strongest performing of the sub-sectors, in line with the recent trend. However, the increase in civil engineering activity strengthened and was the fastest since March 2011. Only a slight increase in residential construction was indicated.
A substantial rise in new business received by UK construction companies was seen in March. Growth has now been sustained for six consecutive months, and the latest rise was the sharpest since September 2007. Panellists commented that a general improvement in market activity, increased tender opportunities and long-running negotiations coming to completion had boosted new work intakes in the latest survey period.
March data signalled a rise of employment in the UK construction sector, reflective of growth of both output and new orders. However, the rate of job creation was only modest. Increased usage of sub-contractors was also indicated.
Purchasing activity rose at the fastest pace for more than four years in March, in line with a faster expansion of output requirements. Subsequently, suppliers’ delivery times lengthened again. Anecdotal evidence suggested that vendors continued to hold low inventories.
Input prices faced by UK construction companies rose sharply in March. Higher raw material costs, particularly for oil, were cited as the main driver of inflation. Nonetheless, the latest increase was below the long-run trend.
UK construction companies were optimistic in March that activity would rise over the next year. Positive sentiment strengthened to a 22-month high, indicating that confidence continued to improve. Expectations for new marketing initiatives, a more buoyant outlook among clients, rising tender opportunities and company expansions are all anticipated to support growth. Nonetheless, optimism remained below the historical average.
Markit chief economist Chris Williamson said: “The good weather appears to have led to a surge in demand for construction projects in March, adding to the recent flow of good news which suggests the economy will have skirted a recession.
“Construction companies reported the largest monthly rise in new orders for four-and-a-half years, driving building activity higher at the fastest rate since mid-2010. Coupled with increasing activity recorded in the first two months of the year, this bodes well for the sector’s contribution to overall growth of the economy in the first quarter and will raise hopes that the country has avoided a slide back into recession.
“Looking ahead, the lack of big new projects such as Crossrail and the Olympics means expectations about the year ahead continued to run well below the pre-crisis peaks, but business confidence nevertheless reached the highest for nearly two years, driven up by expectations of increases in new order intakes and improving client optimism.
“The particularly encouraging news is that the improvement in confidence is generating more jobs, with employment rising modestly.”
Source: The Construction Network
- UK construction PMI reaches 56.7 in March 2012 (newstatesman.com)
- UK construction growth bolsters economic recovery hopes (guardian.co.uk)
- Hewlett continues to weather the recession as it heads into its 25th year (theconstructionindex.co.uk)
- UK Construction Sector Sees Unexpected Boost (news.sky.com)
- Construction firms optimistic despite January slowdown (guardian.co.uk)
- Construction growth slows in January (telegraph.co.uk)
- US factory output rises, but construction falls (newsok.com)
Architect is one of three pitching for bank’s European HQ
The US bank is looking at building its new office on Farringdon Street and switching staff from a series of offices elsewhere in the City. Any new building would have to be limited to 15 storeys to avoid blocking views of nearby St Paul’s Cathedral.
Pei Cobb Freed designed a building for Credit Suisse bank in the 1990s but its work in the UK has been limited since then. It was one of the firms to miss out on the chance to design the new US embassy building at Nine Elms, which was won by rival US firm Kieran Timberlake.
- Goldman Sachs, Citigroup and Barcap have all rebuilt their European businesses since 2008. Where does this leave the rest? (news.efinancialcareers.com)
- Former Goldman Sachs VP Greg Smith could cash in with memoirs (shortformblog.com)