The United Kingdom plummeted even deeper into recession than it did during the first quarter of this year soon after a heavy drop in construction production yielded the Bank of England to make more contingencies to safeguard Britain’s economy against the ongoing onslaught of the Eurozone crisis. Moreover, the Bank of England has already made indications of its preparedness to increase the monetary resources of its economy by breaking its 325 billion pound quantitative easing programmes the early this month.
The office for National Statistics mentioned that the economy went down 0.3 per cent in the first quarter of this year which was considered a downward revision from the preliminary projection of a 0.2 per cent decrease. Year after year the economy contracted by 1 per cent decrease since the fourth quarter of 2009, a seemingly predicative pattern of a worse-case economic scenario. The economy however has expanded by 0.3 per cent since the governance of the Liberal Democrat in 2010 and the official reports of government expenditures and contribution to the British economy between January and March.
The abovementioned figures was awkwardly uncomfortable for Chancellor George Osborne to comprehend since he had made strong words of reassurance to press forward with harsh austerity measures to cut back on Britain’s debt and further argued that the private sector can lightened the burden of public spending.
The ONS made mentioned that the downward adjustments to the Q1data of a steep drop in construction output, falling 4.8 per cent on the quarter was its sharpest decline since Q1 of 2009. Recommendations include the government should find the needed resources to make additional investments in infrastructure to augment the flow of credit to companies. In addition, the IMF may even mull over a temporary tax cut to strengthen demand.
While the BoE is very much alarmed regarding the official data might that appears to understate the strength of the economy, recent surveys have showed distressing trends since an extra public holiday in June can potentially depress further economic growth in the second quarter.
A further sign of weakness in the economy as published by the British Bankers’ Association revealing net mortgage lending increased by 715 million pounds in April which was relatively half the increase recorded a year ago, although the number of mortgage approvals was up a little on that year.