The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.

It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

But the figures could still be revised up or down at a later date, because this figure is only the first estimate.

GDP measures the total amount of goods and services produced by a country.

Quarterly growth of 0.2% had been expected in the figures from the Office for National Statistics (ONS), although expectations had been tempered by recent figures showing no growth in retail sales in September, and a 2.5% decline in industrial output in August.

The unexpected decline in the services sector was the key factor behind the drop, with the distribution, catering and hotels sector performing particularly badly.

The UK economy’s reliance on the service sector, and financial services in particular, may be the reason why it is still in recession when partners such as France and Germany exited earlier in the year.

The economy contracted 5.2% compared with the same period last year, which was marginally better than the record figure of 5.5% in the previous three months.

It has now contracted 5.9% from its peak before the recession began.

The worse-than-expected GDP figures are likely to make the Bank of England consider extending its policy of quantitative easing.

Quantitative easing is the central bank’s policy of printing money and using it to buy bonds from banks and other companies to help stimulate the economy.

“Back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme,” Bronwyn Curtis from HSBC told the BBC.

The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.

It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

But the figures could still be revised up or down at a later date, because this figure is only the first estimate.

GDP measures the total amount of goods and services produced by a country.

Quarterly growth of 0.2% had been expected in the figures from the Office for National Statistics (ONS), although expectations had been tempered by recent figures showing no growth in retail sales in September, and a 2.5% decline in industrial output in August.

There’s no disguising how grim these figures are. Almost every City analyst expected there to be positive growth in the third quarter. Instead it was negative.

That means the recession in the UK is the longest since modern records began in the 1950s.

Germany, France and Japan have all come out of recession technically and the UK hasn’t. The decline has continued.

And the markets didn’t really like the look of that. The foreign exchange markets have been selling the pound.

The unexpected decline in the services sector was the key factor behind the drop, with the distribution, catering and hotels sector performing particularly badly.

The UK economy’s reliance on the service sector, and financial services in particular, may be the reason why it is still in recession when partners such as France and Germany exited earlier in the year.

The economy contracted 5.2% compared with the same period last year, which was marginally better than the record figure of 5.5% in the previous three months.

It has now contracted 5.9% from its peak before the recession began.

The worse-than-expected GDP figures are likely to make the Bank of England consider extending its policy of quantitative easing.

Courtesy of  BBC News

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The backlog of undelivered mail caused by the postal strikes has now risen to 35 million items, Royal Mail has said.

The statement came on the second day of the second wave of strikes. The latest action involves 400 workers at three sites in Plymouth, Stockport and Stoke.

The Communication Workers Union (CWU) said the estimate was "laughable".

Meanwhile, talks between the CWU and Royal Mail are set to continue next week. They have been locked in a row over pay and modernisation.

Royal Mail said it had now cleared virtually all delays caused by last week's stoppages and that it was doing "all it reasonably and legally can" to get the post to its customers as soon as possible.

But the CWU disputed the management's figures, alleging that between 50 million and 60 million items had in fact been delayed.

Weekend consultations

The two sides have been meeting this week at the TUC headquarters in London, with talks carrying on during Friday afternoon.

Brendan Barber, general secretary of the TUC, who helped settle a dispute between the parties in 2007, said proposals had been put to the union and the company.

"They've agreed to look at those proposals over the weekend and consult appropriately with colleagues, with a view to returning to the TUC for further negotiations early next week," he said.

He added that both parties had agreed to his request that they did not comment publicly on negotiations while they were continuing.

The latest wave of industrial action is to continue on Saturday, when 77,000 delivery and collection staff are due to strike.

On Thursday, an estimated 44,000 CWU members took part in strike action across the country.

These strikes follow two 24-hour stoppages last week.

Courtesy of  BBC News