Consumers in the U.K. are technically facing a double-dip recession as household spending posted its second consecutive quarter of contraction in the first three months of the year, according to The Daily Telegraph. On Thursday, the Office for National Statistics reported that consumers in the U.K. cut back on spending by 0.6% in the first quarter of 2011, continuing the downward trend started with a 0.3% decline in the last three months of 2010. The two round of quarterly data reflected the worst state of household spending since the depths of the recession in 2009.
Andrew Grantham of HSBC said the data puts “the U.K. consumer technically back in recession,” while Amit Kara of UBS observed that consumer spending has now “made a negative contribution to gross domestic product growth for the year as a whole.” The struggles facing consumers in the U.K. have also held back the housing market, with a separate report from the British Bankers’ Association showing a 6% drop in mortgage approvals during April. The 29,355 mortgages granted to homebuyers in the U.K. was down nearly 20% from one year earlier, with the average value of a mortgage off 1.1% year-over-year at £145,100. Economic headwinds suggest to Howard Archer of IHS Global Insight that “modest falls in house prices are more probably than not over the coming months.”
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