May 24 - Britain fell deeper into recession, as the economy contracted more in the first quarter than initially thought, leading some to question the country's austerity measures and increasing the likelihood of the Bank of England injecting more money into the economy. Joanna Partridge reports.
Britain might be basking in sunshine, but the economic situation just got bleaker. The UK is already in a double dip recession - but it was deeper in the first quarter of the year than was first thought. Official figures show the economy shrank by 0.3% rather than the initial estimate of 0.2%. Michael Hewson is from CMC Markets. SOUNDBITE: Michael Hewson, CMC Markets, saying (English): "Just last week we saw some very disappopinting construction data, it showed that the construction sector had actually contracted more than originally had been expected, so I think the bigger contraction we saw today had really already been priced in." The figures are seen as increasing the likelihood that the Bank of England will have to pump more money into the economy. The GDP data will make uncomfortable reading for Britain's Finance Minister George Osborne. He's promised to continue the unpopular austerity measures introduced to cut the country's debt. But the IMF this week warned about the risks facing Britain and urged policymakers to boost growth however they can. Chloe Smith is Economic Secretary to the Treasury. SOUNDBITE: Chloe Smith, Economic Secretary to Britain's Treasury, saying (English): "What we've been doing of course is earning credibility for the British economy, having been able to keep interest rates low and having been able to make Britain stand back up again and say we are dealing with our debts, means that we then have the kind of opportunity to focus on jobs measures, such as supporting more infrastructure, such as supporting new housing, such as getting credit to businesses." Even though Britain isn't in the euro zone Europe's its main trading partner. The euro zone's service and manufacturing sectors weakened in May. And as it's still struggling to resolve its debt crisis, the outlook's gloomy for Britain and the European region as a whole. Joanna Partridge, Reuters