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”
House Of Twits
RT @wdjstraw The worrying picture which says it all about the George Osborne's economic policy http://bit.ly/gJLYSP
Kirstie Keatings
RT @brianfmoylan: RT @leftfootfwd: British economy contracts again http://bit.ly/fqHvaL #ukpolitics #tories #osborne #economy #offacliff
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.
Oxford Kevin
Bightspot: Manufacturing and utilities. How much of that was gas and electricity use to keep us warm?
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.