Building slump triggered recession
Published: 03 July, 2009
LONDON: The building industry took the biggest hit in the recession according to the latest figures from the Office for National Statistics.
Between January and March the economy shrank by 2.4% rather than the previously thought 1.9%, a more severe contraction than occurred in the whole of the recession of the early 1990s.
But the drop in building activity was so severe - around half of the ONS's downward revisions for GDP in the first quarter of 2009 were accounted for by the construction industry - that it dragged the rest of the economy down and by more than City analysts anticipated.
Much of the fall in output over the past few months has been attributed to the 'inventory recession', but the latest figures suggest constrained bank lending will continue to restrict growth even after the 'destocking' phase has ended and the economy enjoys a temporary bounce.