British economy shrinks at fastest rate for 30 years
The British economy shrank at the fastest rate in 30 years in the first three months of this year, raising fresh doubts over Alistair Darling's budget forecasts just 48 hours after they were announced.
Official figures released this morning showed gross domestic product (GDP) fell by 1.9% between January and March. This is the sharpest quarterly decline since the third quarter of 1979, the year when Margaret Thatcher came to power.
This was far worse than the 1.5% decline forecast by City economists. It contradicts the chancellor's claim on Wednesday that the economy shrank "by a similar amount" to the fourth quarter, when it contracted by 1.6%.
ING economist James Knightley said: "Today's GDP report again highlights how optimistic Darling was in his budget assumptions and that the risk to the fiscal deficit remains heavily to the upside."
The downturn is forcing the chancellor to borrow £175bn this year.
The data from the Office for National Statistics (ONS) revealed that output in the first quarter was 4.1% less than a year ago, the worst annual decline since the end of 1980.
