27 June 2013, by Scott Hamilton & Jennifer Ryan (bloomberg)

Excerpt:

Britons’ disposable income plunged the most in more than a quarter of a century in the first quarter, indicating continued pressure on the economy even as data showed the U.K. avoided a double-dip recession in 2012.

Real household disposable incomes fell 1.7% from the previous three months, the most since 1987, the Office for National Statistics said in London today.

It also revised higher 2012 data to show that the U.K. avoided two consecutive quarters of contraction, the technical definition of a recession. Separately, GDPc product rose 0.3% in the first quarter of this year, matching a previous estimate.

The economy is showing signs of strength after resuming growth in the first quarter, though consumers are under pressure as inflation outpaces pay growth and government spending cuts bite.

Bank of England Governor Mervyn King, who is retiring and will be replaced by Mark Carney on July 1, says a recovery “is in sight,” though is “too weak to be satisfactory.”

“The top story may be that the early 2012 recession is no more, but this is just about the only good news in this data,” said George Buckley, an economist at Deutsche Bank AG in London.

“First, even with no official recession the economy was still very weak over that period. Second, the squeeze in real incomes continues apace.”

The pound erased its gain against the dollar after the data, falling to a three-week low. It was at $1.5266 as of 11:25 a.m. London time, down 0.3% from yesterday.