Figures released today by the ONS indicate Gross Domestic Product (GDP) fell by 0.2 per cent in the first quarter of the year which combined with the 0.3 per cent fall in the last quarter of 2011 combine to leave the UK economy officially in recession.
Technically a recession is defined as two quarters of economic contraction. The last time the UK economy experienced two recessions without a full recovery in between, a double-dip recession, was in the 1970s.
BHA
The construction sector was the main driver behind the poor data with a 3 per cent drop in output compared to only a marginal drop in the three months to the end of the last year. Production industry output fell by less than 1 per cent and the service sector actually reversed a small drop in the last quarter of 2011 to post an increase in output of 0.1 per cent.
A spokesperson for the British Hospitality Association (BHA) told BigHospitality the fact the economy was now in a technical recession was not a sign of a great change in how hospitality operators were faring.
"You need to differentiate between London hotels and those in the provinces, where the performance is markedly poorer. London hotels are still performing well with little evidence of the recession; those in the provinces have been performing at a much lower level for the last couple of years and are continuing to suffer," he said.
Restaurants
Last week BigHospitality reported the foodservice analysts Horizons said the UK restaurant sector was currently building a solid foundation to build on and lead the industry to a post-recession recovery over the next 18 months. Industry innovation and increased consumer spend was behind the continued opportunity for the sector, according to Horizons.
Following the news the country was in recession the BHA agreed with the overall message that the restaurant industry had continued to operate well in difficult times.
"Restaurants, too, are having to fight for business. Two-for-one deals and other offers are still very prevalent. These offers boost footfall or occupancy but are clearly not so profitable as full rate business. But the industry has survived the recession in reasonably good shape with relatively few insolvencies but we’re not out of the woods yet," a spokesperson said.
Last week BigHospitality reported the difficult economic picture was continuing to impact pubs and bars which are among the country's 'most distressed' UK businesses, according to the latest Red Flag Alert statistics from Begbies Traynor.