0.2 of a percentage point may not seem a great deal in the context of the UK economy but this morning we now know officially that our economy is shrinking.
The fourth quarter of the year saw gross domestic product dropping by a greater-than-expected amount and appears to point to the fact that we are sliding into recession.
The reason for the worst than expected figures was that service sector output was flat during the quarter rather than up by 0.2 which is what analysts were expecting.
If we do enter recession this year,it may be more of a technical one rather a much deeper type which we experienced in 2008-2009 but nevertheless,be it recession or flat line growth(cue Ed Ball's handsignals) we are in for a bumpy ride this year and next.
Yesterday saw the IMF once again cutting its global forecasts for world growth down from four per cent to 3.25 per cent at the same time cutting its growth forecast for the UK economy to 0.6 per cent from 1.6 per cent.
Speaking before the figures were the top dog at the Bank of England Sir Mervyn King gave some hope saying that there was scope for another round of quantitative easing and to leave interest rates at record lows if necessary because inflation is falling.
A small crumb of comfort maybe from the Bank but King also warned that 2012 would not be an easy year and said the recovery from the banking crisis will be slow.
Responding to the figures Ed Balls has described the figures as a damning indictment of David Cameron and George Osborne’s failed economic plan.
“And far from the eurozone crisis being to blame, it is only rising exports that kept us out of recession last year. By clobbering the economy with spending cuts and tax rises that go too far and too fast, the Government has left us badly exposed if the eurozone crisis deepens this year. This was entirely avoidable and the Chancellor cannot say he wasn’t warned." said the shadow Chancellor