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The U.K.'s gross domestic product or GDP shrank 0.4% in the three months ended October compared to the previous three month period and similar to the 0.4% decline in the three months ended September, the latest monthly estimate of GDP from the National Institute of Economic and Social Research showed Thursday. The GDP indicator has been on a declining trend for the last seventeen months.
The latest estimate raises further doubts over the health of economy, with an exit from recession still seemingly no where in sight. The institute said that the buoyant industrial production data was positive, although growth in recent months had been offset by a renewed weakness in August.
The profile of the economy suggested that the current recession is slightly worse than the recession in the 1980's but not as bad as the great depression in the 1930's, NIESR said.
Official data showed that the British economy contracted 0.4% sequentially in the third quarter, after shrinking 0.6% in the second quarter. Economists had expected the economy to exit the recession in the third quarter by expanding 0.2%. The decline in the third quarter was the sixth consecutive quarter of contraction, and marks the longest streak of economic contraction on record.
The disappointing GDP data has forced the Bank of England to raise its quantitative easing measures even further. Earlier in the day, the central bank's Monetary Policy Committee decided to maintain its key interest rate at 0.50%, while the size of the asset purchasing scheme was raised by a further GBP 25 billion to GBP 200 billion.
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