UK back in recession after GDP contraction

The United Kingdom is back in recession after its economy shrank in the first quarter of 2012.

Gross domestic product (GDP) fell 0.2% between January and March, after a 0.3% drop in the December quarter, the Office for National Statistics says.

Recession is defined as two successive quarters of GDP contraction.

Prime Minister David Cameron said the UK was being buffeted by the European downturn.

“We are in a difficult economic situation in Britain,” Cameron told the UK parliament.

“Just as you see now recessions in Denmark, in Holland, in Italy, in Spain, that is what is happening in the continent that we trade with. What is absolutely essential is we take every step we can to help our economy out of recession,” he said.

But Labour leader Ed Miliband accused the government of running a “catastrophic economic policy” saying it was Cameron’s plan for austerity that landed the country back in recession.

Deutsche Bank economist George Buckley said a second quarter of falling GDP combined with the likelihood of a weak current quarter meant the UK is was in recession territory for the first time since the 1970s.

“Fiscal austerity, private sector debt reduction, European sovereign uncertainty and sticky inflation all present challenges to the recovery,” Buckley said.