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UK economy is still in recession UK economy is still in recession
(10 minutes later)
The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.
It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.
But the figures could still be revised up or down at a later date, because this figure is only the first estimate.But the figures could still be revised up or down at a later date, because this figure is only the first estimate.
GDP measures the total amount of goods and services produced by a country.GDP measures the total amount of goods and services produced by a country.
Quarterly growth of 0.2% had been expected in the figures from the Office for National Statistics (ONS), although expectations had been tempered by recent figures showing no growth in retail sales in September, and a 2.5% decline in industrial output in August.Quarterly growth of 0.2% had been expected in the figures from the Office for National Statistics (ONS), although expectations had been tempered by recent figures showing no growth in retail sales in September, and a 2.5% decline in industrial output in August.
UK IN RECESSION Following the unexpected news that the UK economy is still in recession, BBC News is spending the day looking at the state of the economy across the UK and the prospects for recovery. Q&A: What is GDP? Special report: UK economy
The unexpected decline in the services sector was the key factor behind the drop, with the distribution, catering and hotels sector performing particularly badly.The unexpected decline in the services sector was the key factor behind the drop, with the distribution, catering and hotels sector performing particularly badly.
The economy contracted 5.2% compared with the same period last year, which was marginally better than the record figure of 5.5% in the previous three months.The economy contracted 5.2% compared with the same period last year, which was marginally better than the record figure of 5.5% in the previous three months.
UK IN RECESSION Following the unexpected news that the UK economy is still in recession, BBC News is spending the day looking at the state of the economy across the UK and the prospects for recovery. Q&A: What is GDP? Where the recession has hit hardest Special report: UK economy
The worse-than-expected GDP figures are likely to make the Bank of England consider extending its policy of quantitative easing.The worse-than-expected GDP figures are likely to make the Bank of England consider extending its policy of quantitative easing.
Quantitative easing is the central bank's policy of printing money and using it to buy bonds from banks and other companies to help stimulate the economy.Quantitative easing is the central bank's policy of printing money and using it to buy bonds from banks and other companies to help stimulate the economy.
"Back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme," Bronwyn Curtis from HSBC told the BBC."Back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme," Bronwyn Curtis from HSBC told the BBC.
'Awful''Awful'
The £175bn already announced for the quantitative easing programme will have been spent by next month, so the strength of the third quarter GDP number will be important in deciding whether to extend it.The £175bn already announced for the quantitative easing programme will have been spent by next month, so the strength of the third quarter GDP number will be important in deciding whether to extend it.
The figures were "awful with no positive news" according to James Knightley at ING.The figures were "awful with no positive news" according to James Knightley at ING.
"This clearly suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, although [it] is not a foregone conclusion.""This clearly suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, although [it] is not a foregone conclusion."
The pound fell more than a cent against the US dollar following the release of the figures, with traders particularly concerned that the UK may turn out to be the only major economy still in recession.The pound fell more than a cent against the US dollar following the release of the figures, with traders particularly concerned that the UK may turn out to be the only major economy still in recession.