"The concerns emerged after the Office for National Statistics (ONS) revealed that the double-dip recession was even worse than feared. The economy shrank by 0.3pc in the first quarter of the year, the ONS said in its second estimates, rather than the 0.2pc initially thought.
Government spending hit record levels in the three months to March in spite of the austerity drive, rising by 1.6pc to £81.5bn and delivering 0.4 percentage points of overall economic growth. However, the taxpayer-funded boost was not enough to offset weak activity in construction, trade and the financial sector.
Geoff Dicks, chief economist at Novus Capital and a former director of the Office for Budget Responsibility, said: “So much for cuts in public spending.” HSBC economist Simon Wells, who had expected state spending to be unchanged, described it as a “big surprise” and said the levels were “unsustainable if the coalition sticks to its fiscal plans”.
The economy’s weak performance was driven by a disastrous slump in construction, which shrank 4.8pc compared with the initial 3pc estimate. Trade also knocked 0.1 percentage points off growth as the country imported more than it exported.
Economists had pinned their hopes on improvements in the all-important services sector, which accounts for three quarters of the national output, but were let down by the embattled banking industry. Output in financial and insurance services contracted by 0.8pc to fall back to levels not seen since 2005. "
More from ze source: Government spending prevents worse double dip recession - Telegraph
Government spending hit record levels in the three months to March in spite of the austerity drive, rising by 1.6pc to £81.5bn and delivering 0.4 percentage points of overall economic growth. However, the taxpayer-funded boost was not enough to offset weak activity in construction, trade and the financial sector.
Geoff Dicks, chief economist at Novus Capital and a former director of the Office for Budget Responsibility, said: “So much for cuts in public spending.” HSBC economist Simon Wells, who had expected state spending to be unchanged, described it as a “big surprise” and said the levels were “unsustainable if the coalition sticks to its fiscal plans”.
The economy’s weak performance was driven by a disastrous slump in construction, which shrank 4.8pc compared with the initial 3pc estimate. Trade also knocked 0.1 percentage points off growth as the country imported more than it exported.
Economists had pinned their hopes on improvements in the all-important services sector, which accounts for three quarters of the national output, but were let down by the embattled banking industry. Output in financial and insurance services contracted by 0.8pc to fall back to levels not seen since 2005. "
More from ze source: Government spending prevents worse double dip recession - Telegraph
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