Triple-dip alert: Recession fears as figures show industrial output has fallen to lowest level in 20 years
Further fall in
North Sea production which has dropped by almost 50 per
cent in the past three years Cameron declares Britain must be more like Germany and develop a modern workforceFears a cold winter could spell further economic gloom
13:27 GMT, 8 December 2012
In a blow for Chancellor George Osborne financial markets have predicted Britain is heading for a triple dip recession
Britain is on the brink of a triple-dip recession, experts warn as latest figures reveal industrial output has now fallen to its lowest level in 20 years.
In a week when chancellor George Osborne put yet another squeeze on the hard working middle-classes, figures for October revealed manufacturing production dropped by 1.3 per cent – more than two per cent down on this time last year.
Markets had been optimistic that October would have seen a rise in industrial production but figures from the office for national statistics revealed it had fallen by 0.8 per cent.
This was partly caused by a fall in
North Sea production of gas and oil, which has dropped by almost 50 per
cent in the past three years.
Forecasts prepared by the Office for
Budget Responsibility see the economy continuing to shrink for the final
three months of 2012 before growth resumes early 2013, picking up
steadily throughout the course of the year.
But the OBR has, in the past, been
accused of being over-optimistic in its predictions and many economists
question whether their figures would be met.
Some are calling this recession the
worst yet – and while not as deep as those experienced in the 1920s and
1930s, recovery has been considerably slower.
Yesterday David Cameron declared that
Britain must be more like Germany and develop a more modern workforce
after companies complained of a lack of newly trained engineers.
Optimists have pointed to a strong
start to the Christmas shopping season and progress being made in Europe
to tackle the sovereign debt crisis.
The wider measure of industrial
production fell 0.8 per cent, reflecting a record fall in oil extraction
although this was partly due to maintenance on North Sea rigs.
Making do: The fall in factory output was far worse than had been expected.
Industrial production fell 0.8 per cent, reflecting a record fall in oil extraction although this was partly due to maintenance on North Sea rigs
The decline adds to the recent flow
of disappointing numbers for the UK economy at the start of the fourth
quarter and bodes ill for GDP after a rise of 1 per cent in the autumn
ended the longest double-dip recession since the 1950s.
said yesterday that the trade in goods deficit – the difference between exports and
imports – widened to 9.5billion in October from 8.4billion in
It came as
exports fell one per cent in a blow to ministers pinning their hopes on
booming demand for British goods overseas to more than make up for
subdued spending at home.
Downturn continues: Exports fell 1 per cent, dashing hopes on demand for British goods overseas
Exports are more than 10 per cent
lower over the year to some major European countries including Germany,
Italy, Spain, Belgium and Luxembourg. However, exports to China are 7.6
per cent higher than a year ago.
were up 6.3 per cent to the United States and 65.1 per cent to South
Korea. The ONS noted ‘a shift in the pattern of the UK’s trade’ – with
exporters becoming far less reliant on the troubled eurozone for
Markit chief economist Chris
Williamson said: 'Judging by the official data that we have seen for the
fourth quarter so far, notably retail sales, trade and industrial
production, the UK will struggle to avoid a renewed downturn in the
economy after the brief return to growth seen in the third quarter.'
The Office for Budget Responsibility
this week slashed growth forecasts for the next five years and predicted
a borrowing bill some 84billion higher than its last estimate.
Mr Williamson added: 'While a dip
back into contraction may prove mild and short lived, the concern is
that any new downturn will not only put further pressure on the UK's AAA
credit rating but also provide a further set-back to a much needed
improvement in business and consumer confidence.'