How did the UK double-dip recession come about?

A recession is defined as two consecutive quarters of negative economic growth.

Today the UK went back into recession. The economy shrank by 0.3% in the last quarter of 2011 and 0.2% in the first quarter of 2012. Why has this happened?

A sharp fall in the Construction Sector over the last three months is perhaps a reason behind it. However, it ultimately shows that the Monetarist policy that the Conservative Party have adopted is not working. The fundamental aspect of the policy is to cut spending and increase taxes; a contractionary fiscal policy. The clue is in the name. Surely the economy wants to expand? not contract? So, perhaps a Keynesian policy should be adopted; spending our way out of recession. However, as shown by the Labour party under Gordon Brown, over spending and over borrowing is a recipe for disaster.

Ultimately, this shows the weakness of both political parties when it comes to running an economy.

For example, someone said to me today, one of the potential reasons behind David Cameron causing people to panic buy fuel, was because he was desperate to boost the economy knowing the figures for growth were likely to be negative.

A flawed way to try to increase economic growth.

It is unlikely that this recession is going to be as destructive and effective as the last one, as the growth figures are quite small in comparison to the height of negative growth in Q4 of 2008 at 2.3%.

It shows the powerful role of the media in making it out to be worse than it really is.


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