THE UK economy is likely to have shrunk yet again in the second quarter, making this the longest recession in modern history, according to estimates released yesterday by the National Institute of Economic and Social Research (NIESR).
Their prediction that GDP fell 0.2 per cent in the second quarter carries some weight among analysts, because NIESR estimates have in the past correlated closely with later-released official GDP figures.
The estimates show that the UK was still more than four per cent down on peak GDP in June, despite the passage of more than 50 months since the beginning of the decline. In all previous recessions and depressions the UK was above peak GDP by 47 months after the initial crash.
Though they estimated a marginal quarterly uptick of 0.1 per cent in May, the five previous months all had negative predictions.
Labour and the trade unions pounced on the figures, using the data to attack chancellor George Osborne’s policies.
Trades Union Congress general secretary Brendan Barber put poor economic outcomes down to austerity, claiming: “This grim forecast shows that unless the government changes course, the UK could be less than halfway through a lost decade of weak growth and high joblessness.”
Labour’s Rachel Reeves MP said the UK needed a chancellor “focused full-time on the national economic interest...and reforming our banks.”
Quarter-on-quarter growth estimates have now been zero or negative since the three months to February 2011, when it was predicted that GDP had grown 0.1 per cent on the previous three months.
Sector-by-sector, there have been falls across the board except for in public services, which has shown consistent gains since a slight fall in early 2011.