LONDON — Britain in the first quarter returned to a deeper recession than estimated earlier, according to official data released Thursday, because of a larger slump in the construction industry.
The data put additional pressure on the government of Prime Minister David Cameron, which has adopted austerity measures to reduce debt, to consider ways to spur economic growth.
The Office for National Statistics revised the drop in gross domestic product in the first three months of this year to 0.3 percent from the 0.2 percent it estimated last month. Construction output dropped 4.8 percent, more than the 3 percent estimated earlier.
The revision was “likely to add to growing concerns over the U.K.’s growth momentum, or apparent lack thereof,” said Chris Crowe, an economist at Barclays.
Britain’s economy fared worse than that of the eurozone, which avoided slipping back into a recession at the beginning of the year mainly because Germany recorded a 0.5 percent growth in the period.
Cameron and George Osborne, the chancellor of the Exchequer, have repeatedly blamed a large part of the ills of the British economy on the economic crisis in the eurozone, Britain’s largest export market. Leaders from the opposition Labor Party and some economists said the recent data made such claims sound increasingly hollow.
“Our complacent and outof-touch prime minister and chancellor have spent the last week claiming their plan is on track, but these figures show that Britain’s double-dip recession is even deeper than first thought,” said Ed Balls, the Labor Party’s minister for finance. “What more evidence can David Cameron and George Osborne need that their policies have failed and that they now need a change of course and a Plan B for growth and jobs?”
The revised economic data give additional ammunition to critics of austerity measures imposed in Britain, including cuts in tens of thousands of public-sector jobs, pay freezes, and spending cuts. The critics have asked the government to loosen its focus on eliminating the budget deficit.
Osborne has said he will stick to his plan, pointing to relatively low interest rates for British debt and praise from rating agencies for the debt-reduction program.
Christine Lagarde, managing director of the International Monetary Fund, backed the austerity plan earlier this week but also said that Britain would need to consider incremental change, which could include more stimulus from the Bank of England, if the economic recovery continued to falter.
The Bank of England decided this month to halt a stimulus program that included the purchase of government bonds as it shifted its focus back to inflation from the economic recovery. But minutes of the central bank’s policy committee meeting showed that committee members remained open to expanding the stimulus program should the economy get worse.
Britain’s economy is suffering as households are squeezed by rising consumer prices, especially for electricity, while many salaries are frozen. Concern about unemployment and the impact of austerity measures have further curbed household spending.
Banks are still reluctant to lend as they are required by new regulation to build up their capital buffers. Companies are delaying investments in new jobs or equipment because they are unsure about future demand for their products.
Business, Pages 27 on 05/25/2012