The UK has officially slipped into a double dip recession. From the WSJ:
— U.K. GDP shrinks 0.2% on quarter in 1Q
— U.K. officially back in recession after contraction in 4Q 2011
— Slide in output driven by construction slump, falling industrial production
— Sterling sinks, gilts rally
— Finance chief Osborne says won’t change course on austerity
— GDP contrasts with more upbeat survey data
UK Finance Minister George Osborne seems undeterred:
Recession’s return will provide fresh ammunition to opponents of Finance Minister George Osborne’s austerity drive, an aggressive program of tax rises and spending cuts aimed at closing a persistent budget deficit that critics say will strangle growth.
But Osborne said Wednesday he won’t ditch his austerity plan.
“The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt,” he said.
Since the results of the the first round of French elections and the failure in The Netherlands to ok the Fiscal Pact and the subsequent collapse of the Netherlands ruling coalition alot of people, including me, have been taking a contrarian view of the situation, thinking this will force Euro governments to at least soften their insistence on budget cuts amidst and ever weakening economy. Osborne doesn’t think so, nor does Simone Foxman at Business Insider:
It is true that swift, harsh austerity without guarantees of survival is not helping anyone, but we will never see a complete elimination of such policies, nor should we. Recent developments may represent steps towards a more sensible crisis approach, but this baby is still learning to crawl, not run.