April 25, 2012 - 15:54 AMT
Britain's economy relapses into recession

Britain's economy is in its second recession since the financial crisis, data showed on Wednesday, April 25 heaping pressure on Prime Minister David Cameron's coalition government as it battles a series of political embarrassments, Reuters reported.

The unexpected contraction in the first three months of 2012 - a 0.2 percent dip in gross domestic product - confounded forecasts for 0.1 percent growth.

It came as Britain's Conservative-Liberal Democrat coalition has seen its support slide in opinion polls following weeks of fierce criticism for unpopular tax measures in last month's budget. Local elections, a big test, are on May 3.

The government is also under fire over revelations about its close relationship with media tycoon Rupert Murdoch.

The Office for National Statistics said Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 after contracting by 0.3 percent at the end of 2011.

Most economists had expected Britain's economy to eke out modest growth in early 2012, but these forecasts were upset by the biggest fall in construction output in three years coupled with anaemic service sector growth and a fall in industrial output.

The government desperately needs growth to achieve its overriding goal of eliminating Britain's large budget deficit over the next five years. But this will be a challenge as many of Britain's euro zone trading partners are already in recession.

The figures will also be a conundrum for the Bank of England, which had appeared poised to end its second round of quantitative easing gilt purchases due to survey evidence that the underlying economy was strengthening.