After government leaders acknowledged recently in public remarks that the UK was heading for a recession, official figures confirmed that the economy is, indeed, shrinking. The data from the Office of National Statistics show that the gross domestic product contracted by 0.5 percent in the third quarter of 2008, which is the first fall since 1992.
The drop in GDP was larger than expected, and caused even more selling on the FTSE and other markets. Economists are expecting at least several more quarters of contraction in the economy, which will make an official recession. Alistar Darling, the chancellor, tried to reassure investors and the markets with comments recently that the government is committed to help individuals and businesses.
“I’ve lived through the recessions this country saw in the 1970s, 80s and 90s,” he said. “The difference is this time we are determined to do everything we can, and as soon as we can, to help people so that if they lose their jobs they can get back into work, that if businesses get into difficulty we do our level best to help them.”
The official data show that the fall in output was across the board, with only agriculture and government services still growing. The biggest falls were in financial services, manufacturing and construction. Economists said the current quarter and most of 2009 will likely see continued contraction.
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