UK Economy Shrinks 1.9 Percent

LONDON (AP) -- The U.K. economy shrank by 1.9 percent in the first quarter, the government said Friday, confirming the preliminary figure reported earlier.

GDP in the first quarter was 4.1 percent below the previous year, the Office for National Statistics said.

Between the fourth quarter and the first quarter, the agency said manufacturing output fell 5.5 percent, construction dropped 2.4 percent and service industries fell 1.2 percent.

The report put a further damper on speculation about signs of a revival, said Jonathan Loynes, chief economist at Capital Economics.

Even if the economic shrinks by just 0.5 percent in the second quarter, "this would still leave the economy on track to contract by around 4 percent this year," Loynes said.

"And with key components like household spending and investment set to fall considerably further in response to the weakness of the housing market, the labor market and bank lending, we remain unconvinced that recent 'green shoots' will translate into a return to decent growth next year," he said.

The International Monetary Fund has predicted a 4.1 percent drop in U.K. output this year.

British Treasury Chief Alistair Darling has forecast that GDP will fall by 3.5 percent, and says he expects growth to resume before the end of the year.

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