UK economy shrank more than expected in Q4

LONDON Wed Mar 28, 2012 6:49pm BST

1 of 2. A shop advertises deals in its bargain basement, in London January 25, 2011.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Britain's economy shrank by more than expected in the last three months of 2011 than previously thought, driven down by a weaker services sector, official data showed on Wednesday.

The Office for National Statistics said the economy contracted by 0.3 percent between October and December last year, taking the annual rate of growth to 0.5 percent.

Economists had expected unrevised readings of -0.2 percent quarter-on-quarter and 0.7 percent year-on-year.

The figures provide further confirmation of the weak state of Britain's economy at the end of last year, but offer few clues as to whether it managed to stage a recovery early this year - something economists view as likely given recent data.

Nonetheless, the figures may reignite expectations the Bank of England may need to add additional stimulus to bolster growth.

The ONS said the downward revision was driven by the transport and communication and business services and financial sectors.

Meanwhile, household incomes fell and the saving ratio also eased to 7.7 percent in the quarter, its lowest since the start of the year.

The ONS said real household disposable incomes in 2011 as a whole fell 1.2 percent, the biggest drop since 1977.

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Comments (4)
EastEndMonty wrote:
While I am partial to perusing in a Vintage Basement, I find the above image being used for decreasing Growth announcements amusing since sales of second hand goods would not be accounted within GDP figures.

Mar 28, 2012 10:55am BST  --  Report as abuse
scyth3 wrote:
you can forget worrying about spain and ireland

Uk is the sick old man of europe and it is going to wheeze for a lot longer under the dilettante fingering of the old boys club, Cameroon & Osborne Plc

Mar 28, 2012 12:07pm BST  --  Report as abuse
SCSCSC wrote:
More stupid comments from the EU/Fourth Reich faithful.

Please just worry about yourselves. It isn’t over yet, you have Portugal/Spain and possibly Italy/Ireland too. Greece again next year.

At least we have a democracy here unlike the dictatorship that is now evident in the EU. Get a life.

Mar 28, 2012 12:40pm BST  --  Report as abuse
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