British economy contracts again

Figures out today showed a contraction in the UK economy, shrinking 0.5 per cent in the fourth quarter of 2010, reports Shamik Das.

Figures out today showed a contraction in the UK economy, shrinking 0.5 per cent in the fourth quarter of 2010. The Office for National Statistics, which published the figures this morning, state:

“The chained volume measure of gross domestic product (GDP) decreased 0.5 per cent in the fourth quarter of 2010, following growth of 0.7 per cent in the previous quarter.

“Output in the production industries increased 0.9 per cent; output in the construction sector decreased 3.3 per cent; output in the service industries decreased 0.5 per cent. GDP increased 1.7 per cent in 2010 Q4 compared with 2009 Q4.”

The graph below shows the quarter-on-quarter percentage change in GDP:

The ONS add:

“The figures published today show that GDP declined by 0.5 per cent in 2010 Q4. The change in GDP in Q4 was clearly affected by the extremely bad weather in December last year. The disruption caused by the bad weather in December is likely to have contributed to most of the 0.5 per cent decline, that is, if there had been no disruption, GDP would be showing a flattish picture rather than declining by 0.5 per cent.

“We should emphasise that this assessment of the effect of the bad weather is the best we can make it at this stage, but is still inevitably uncertain.”

Production industries, which include manufacturing and utilities, were a much-needed bright spot for the economy having increased by 0.9 per cent on the previous quarter.

Left Foot Forward will have political reaction to the figures later today.

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18 Responses to “British economy contracts again”

  1. Will Straw

    The worrying picture which says it all about the George Osborne's economic policy

  2. Joshuwahwah

    RT @wdjstraw: The worrying picture which says it all about the George Osborne's economic policy

  3. Nicola Smith

    RT @leftfootfwd: British economy contracts again – LFF charts the GDP drop

  4. Brian Moylan

    RT @leftfootfwd: British economy contracts again #ukpolitics #tories #osborne #economy #offacliff

  5. House Of Twits

    RT @wdjstraw The worrying picture which says it all about the George Osborne's economic policy

  6. Kirstie Keatings

    RT @brianfmoylan: RT @leftfootfwd: British economy contracts again #ukpolitics #tories #osborne #economy #offacliff

  7. Philip Craig

    The weather is a significant factor in the disappointing figures announced by the ONS but domestic demand has been getting weaker for many months (as the Regional Development Agencies have been reporting). As a result of higher inflation, weak wage growth, prospects of public sector cuts and an increasing probability of a double dip in Q1, the domestic demand is going to weaken further. This is going to be partially offset by higher business investment and stronger demand from abroad (i.e. notably from the US which, of course, has taken a very different path to growth). But ultimately this country’s growth prospects depend on consumer spending. I hope that there is a plan B. There is no doubt that we need to tackle the deficit but not at the rate suggested by the Coalition. We have a large open economy, our own currency and average debt maturity of some 14 years, against <5 across much of the developed world. 

  8. Oxford Kevin

    Bightspot: Manufacturing and utilities. How much of that was gas and electricity use to keep us warm?

  9. Éoin Clarke

    Historians will view today’s figures as a vindication of Gordon Brown’s handling of the recession. He warned that DC/GO would put the recovery at risk, and he was correct.

  10. David Ward

    No doubt the weather had some impact, but the government can’t hide behind it when they’ve played an important part themselves.

    As I say on my blog, the next few months are a momentus point on politics and history of this government. Osborne’s choice in the coming weeks will define him.

  11. Anon E Mouse

    David Ward – Since these figures do not include the governments changes to VAT and since to date there has not been a single cut from this government on public services how can you make this claim?

    When Labour were borrowing at the height of the tax take, as crazy as that sounds, why were none of the doom merchants shouting then?

    There are years between now and the next election…

  12. scandalousbill

    It would seem to me that if the Tory led coalition or ONS wish to blame the weather, (Gideon has stated this as a *huge Factor”), they should be at least able to indicate how many trading days were lost and how that impacts over at least two months in the quarter where the weather had no impact.
    I recall a few days of snow bound impacts, but no prolonged total shutdown and nothing comparable to the Great Ice Age or the Pakistani floods.

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