1. ITV Report

Britain slumps to worst double-dip recession in 50 years after shock GDP figures

ONS said the wettest April to June on record and the Queen's Jubilee hindered the economy. Photo: Dylan Martinez/PA Wire

Britain slumped to its longest double-dip recession in more than 50 years after figures revealed the economy shrank by a worse-than-expected 0.7% between April and June.

Gross domestic product (GDP) fell for the third quarter in a row and by much more than the 0.2% expected by forecasters, according to the Office for National Statistics (ONS).

ITV News' Business Editor Laura Kuennsberg reports:

Today's figures present another challenge to the Coalition Government which has, and continues to, stake its reputation on an economic recovery based on austerity measures.

ITV News' Political Editor Tom Bradby reports on the political fallout:

The dire performance, which represented the biggest quarterly fall since the depths of the financial crisis in the first quarter of 2009, was hindered by an extra bank holiday for the Queen's Diamond Jubilee and the wettest April to June period on record.

The Chancellor George Osborne blamed "deep rooted" problems in the economy:

We all know the country has deep-rooted economic problems and these disappointing figures confirm that. We’re dealing with our debts at home and the debt crisis abroad.

We’ve made progress over the last two years in cutting the deficit by 25% and businesses have created over 800,000 new jobs.

But given what’s happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that’s exactly what we’re doing.

– Chancellor George Osborne
Chancellor George Osborne will come under pressure after today's GDP figures. Credit: PA

The grim economic reading will pile further pressure on the Government and fuel criticism that Mr Osborne's austerity measures are choking off the recovery.

Responding to the figures, the former Liberal Democrat spokesman for the Treasury Lord Oakeshott called for a "new A team at the Treasury".

Earlier, he told the BBC's World at One programme that George Osborne was "doing well as a chancellor on work experience” but that he lacked the business experience for the job.

The GDP figure is the first estimate and may be revised in coming months, but it suggests the UK is mired in the longest double-dip recession since quarterly records began in 1955.

Vicky Redwood, chief UK economist at Capital Economics, said there was a possibility that the GDP figures are underestimating the true strength of the economy, but added that it would take "pretty hefty revisions" to cast the economy in a positive light.

Striking miners fight with police at the Tilmanstone Colliery near Dover in Kent Credit: PA/PA Archive/Press Association Images

The last double-dip recession was in the 1970s, when the economy was hamstrung by soaring oil prices and a miners strike, but that only lasted two quarters.

The UK's economy is 0.3% smaller than when the Coalition came to power in the second quarter of 2010, the ONS figures showed.

The pound fell against the euro as the data increased chances that the Bank of England will pump more emergency money into the economy or drop interest rates further.

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