Recession: Double Dose Of Doom For UK PLC

There is fresh evidence that the UK economy will fail to overcome the recession in the short term.

The effects of the Euro crisis have been laid bare by the latest trade figures for April - while construction output fell sharply over the month.

Official figures showed the UK trade deficit widened to its greatest level in nearly seven years, as exports to the embattled eurozone plummeted.

The goods and services deficit - the gap between imports and exports - rose to
£4.4bn from £3bn in March, the Office for National Statistics (ONS) said.

The increase was driven by an 8.6% drop in exports, including a 6.8% fall in exports to the EU, the UK's biggest trade partner.

Elsewhere, official construction data showed a 13% fall in output in April driven by a fall in government projects, including housing and infrastructure.

The double dose of disappointing data dampened hopes that the economy may return to growth and emerge from recession in the second quarter.

Last night, the Bank of England governor Sir Mervyn King and Chancellor George Osborne surprised the City with emergency plans to help boost credit facilities for businesses through cheap loans to banks.

The sole aim of the Funding For Lending scheme is to bolster the economy, while a separate initiative will help improve liquidity in the banking system, the men said.

But the latest economic statistics seem to have largely wiped out a mood of improved optimism in the wake of the announcement at Mansion House.

Howard Archer, chief European and UK economist at IHS Global Insight, said: "With the trade deficit widening in April and construction output again disappointing, the chances of the economy avoiding further contraction in the second quarter are dwindling."

Earlier this week, a surprise 0.7% contraction in manufacturing output for April gave birth to gloom that the second quarter had got off on the wrong foot.

Wider industrial production figures were flat but only propped up by higher energy use, explained by the cold, wet and windy start to the summer.