It's Official: The U.K. Is Back in a Recession

Alexander Abad-Santos

For the first time since 2009, the United Kingdom's economy is experiencing a recession. According to the BBC and the Office for National Statistics, the U.K. economy shrank by 0.2 percent in the first three months of 2012, fulfilling the benchmark of a "recession" which, in economic terms, means "two consecutive quarters of contraction." The United Kingdom's GDP had shrank 0.3 percent in the previous quarter. "These figures are slightly worse than many expected, but the fact that the U.K. is now technically back in recession should not detract from the underlying reality, which is very much as predicted," writes the BBC's financial editor Stephanie Flanders. "The U.K. economy has been bumping along the bottom for more than a year and is still struggling to gain momentum."

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And it appears that bad economic numbers have the same effect in the U.K. as they do stateside--things get political. Prime Minister Cameron blamed the recession in part on major trading partners like Denmark, Holland, Italy, and Spain's economic plight. "More borrowing, more spending more debt, that is what caused these problems. It cannot be the solution to these problems," Cameron was quoted as saying in the AFP. Of course the recession news also allowed Labour leader and Cameron's political opponent Ed Milliband to chime in. "This is a recession made by him [Cameron] and the chancellor in Downing Street. It is his catastrophic economic policy that has landed us back in recession," Miliband said in a report by the BBC. 

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Not making these economic woes any better is that the pound has just experienced its biggest drop in two months, according to Bloomberg's Lucy Meakin: "The pound fell 0.3 percent to 81.98 pence per euro at 2:03 p.m. London time, after dropping as much as 0.6 percent, the most since Feb. 22. It appreciated to 81.44 pence yesterday, the strongest since August 2010."