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UK GDP Contracts, as Triple-Dip Threatens

The UK economy shrank by 0.3pc in the last four months of 2012, making the possibility of entering into recession for the third time since 2007 all the more likely.

The Office for National Statistics (ONS) said that the fall in GDP was most likely down to a reduced output from the North Sea and manufacturers. This comes as a massive blow to the coalition government, who just three months ago were celebrating a period of economic growth, and looking optimistically to the future.

This means that the economy is now a total of 3.3pc smaller than the peak in 2008, and has only recovered about half of all the output lost during the financial crisis; a figure that is worse than other struggling economies.

A drop of 10.2pc in mining and quarrying output seems to have hit the economy the hardest, as disruption in the North Sea oil and gas fields meant this was the biggest drop in production since records began in 1997. This alone knocked 0.18 of the GDP, while a demise in factory output also had a detrimental effect.

2013 has experienced a tough start too, with adverse weather conditions caused by snow and ice meaning that major retailers such as John Lewis have reported a fall in sales.

This will increase the pressure on the coalition government, and if the next quarterly report has a minus sign at the front, the UK will once again enter a period of recession.

For more information on the UK GDP, or for any queries associated with the economy and personal finance, please contact one of our team of advisors who will be happy to help.

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