Britain on course for 'triple-dip' recession, data shows
The risk that Britain is entering its third recession in four years grew, with figures showing that manufacturing shrank unexpectedly last month and mortgage approvals for home buyers dropped in January
Gross domestic product fell at the end of last year, bringing Britain within sight of another recession, and the latest data suggested the central bank may need to do yet more to revive the economy.
The pound sank against the euro – making Irish exports to its closest neighbour more expensive.
Sterling fell to its lowest level against the dollar in more than two-and-a-half years.
A separate release showed that mortgage approvals fell unexpectedly despite the authorities' efforts to boost lending.
"It's a bit of a double whammy of disappointing news," said Alan Clarke, economist at Scotiabank.
"Not a good start (to the year) and really shouldn't change anyone's view that there's precious little growth momentum in the UK and particularly not in manufacturing."
The numbers are the latest in a string of bad news for the Conservative-led coalition government and its finance minister, George Osborne. Moody's downgraded Britain's triple-A rating last week, prompted by weak economic growth prospects.
In the last quarter of 2012, a plunge in factory output – which accounts for around a tenth of the economy – shaved 0.1 percentage points off economic growth, according to official data released earlier this week.
Markit said factory output fell last month at the fastest pace since October.
"The return to contraction of the manufacturing sector is a big surprise and represents a major setback to hopes that the UK economy can ... avoid a triple-dip recession," said Chris Williamson, the Markit economist who compiled the manufacturing survey.