UK on brink of triple-dip recession


Britain remains on the brink of a triple-dip recession after figures confirmed the economy contracted by 0.3% at the end of 2012.

The Office for National Statistics (ONS) stuck by its previous estimate for the fourth quarter, although it now thinks the UK economy grew by 0.3% across the whole of last year, rather than previous guidance of 0.2%.%VIRTUAL-SkimlinksPromo%
GDP figures for the current quarter are due to be released at the end of April, with the recent cold weather increasing the chances of two successive quarters of contraction, which would represent a return to recession.

The country's stagnant performance reflects a fall in industrial production of 2.1% in the fourth quarter - including a 10.7% slump in mining and quarrying - and the biggest fall since the first quarter of 2009.

However, household spending in the fourth quarter increased by more than previously thought, up 0.4% from an earlier 0.2% reading. Total disposable incomes rose by 2.1% during the year as a whole, but slipped back 0.1% in the fourth quarter.

IHS Global Insight economist Howard Archer said: "It looks touch and go whether the economy can avoid further contraction in the first quarter of 2013, and hence a 'triple-dip' recession." He said heavy snowfall, which has hit parts of the UK in recent days, increased the chances of another quarter of falling output.

Marginal growth of 0.3% in 2012 compared with 1% in 2011. The figures also showed a household savings ratio of 7.1%, the highest since 1997, as people choose to save rather than spend. This figure was boosted by a £20.1 billion increase in wages and salaries versus 2011.

The UK's current account deficit shrank to £14 billion in the fourth quarter - worth 3.6% of GDP - from an upwardly revised £15.1 billion in the third quarter. For the year as a whole the UK's current account deficit was £57.7 billion.

The trade deficit - the difference between the value of Britain's exports and imports - widened to £9.6 billion in the fourth quarter, up from £8.1 billion in the previous quarter. Companies exported 1.6% fewer goods in the fourth quarter, while services exports fell 1.8%. Dr Archer said: "This export performance is really disappointing, even allowing for the problems in the eurozone and generally muted global growth, and is a blow to hopes that the economy can rebalance."

The UK's persistent economic weakness has already led to the loss of its prized AAA rating.

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UK on brink of triple-dip recession

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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