British economy shrinks, but not into recession

Story highlights

  • Britain's finance minister says the figures are not "unexpected"
  • Britain's economy shrinks by 0.2% in the last quarter of 2011, the government says
  • Growth was positive for the year as a whole, the Office of National Statistics says
The British economy shrank by an estimated 0.2% in the last quarter of 2011, the Office of National Statistics announced Wednesday, but the country is not yet in recession because growth was positive in the quarter before that.
Recession is commonly defined as two consecutive quarters of economic contraction.
Britain's economy grew by 0.9% overall in 2011, the office said, but many economists expect the economy is also shrinking this quarter, which would mean Britain enters recession in the first half of 2012.
The latest figures "are not entirely unexpected because of what's happening in the world, what's happening in the eurozone crisis," said British Finance Minister George Osborne.
During debate in the House of Commons Wednesday, opposition leader Ed Miliband accused the government of caring more about austerity than finding way to grow the economy.
"How bad do things have to be with our economy before it shakes him out of his complacency?" Miliband asked, referring to Prime Minister David Cameron.
On Tuesday, the International Monetary Fund revised its growth projections for the U.K. in 2012 to just 0.6% of GDP, down from the previous prediction of 1.6%. Still, that is higher than the IMF's projections for France and Germany.
"Now Britain has substantial economic problems, debt built over the last 10 years. We are dealing with those," said Osborne. "But the truth is, dealing with those problems is made more difficult by the situation in the eurozone."
Britain has the seventh-largest economy in the world, according to the Centre for Economics and Business Research.