Britons’ disposable income plunged the most in 25 years in the first quarter, indicating continued pressure on the economy even as data showed the UK avoided a double-dip recession last year.
Real household disposable incomes fell 1.7 percent from the previous three months, the most since 1987, the Office for National Statistics said yesterday. It also revised higher 2012 data to show that the UK avoided two consecutive quarters of contraction, the technical definition of a recession.
Separately, gross domestic product rose 0.3 percent in the first quarter of this year, matching a previous estimate.
Britain’s economy is showing some signs of strength after resuming growth in the first quarter, though consumers remain under pressure as inflation outpaces pay growth and government spending cuts bite.
Bank of England governor Mervyn King said this week that while recent data showed the recovery “is in sight”, it was “too weak to be satisfactory”.
Deutsche Bank economist George Buckley said: “The top story may be that the early 2012 recession is no more, but this is just about the only good news in this data.”
The British statistics office said that the economy shrank 7.2 percent from its peak in 2008 to the depths of the recession, more than the 6.3 percent that had been previously estimated. – Bloomberg