GDP shrinks by 0.3 percent

LONDON (Reuters) - The economy shrank by less than previously estimated in the third quarter of 2009 and most analysts now expect a return to growth after the longest recession in at least 50 years at the end of this year.

The Office for National Statistics said GDP fell by 0.3 percent between July and September versus a preliminary reading of a contraction of 0.4 percent.

The upward revision was widely expected by analysts who had been surprised by the weakness of the initial reading when they had been predicting an exit from recession.

On the year, GDP was down 5.1 percent versus a previous reading of down 5.2 percent. The economy has now contracted for six consecutive quarters, the longest unbroken stretch of declines since records began in 1955.

Firms continued to run down inventories at a very sharp pace for the fourth straight quarter, marking a record decline over the last year. This could boost hopes of a rebound in growth once destocking was over but the ONS pointed out that inventories fell for 11 consecutive quarters in the 1990s recession.

Many other major economies have already come out of recession but Britain has lagged behind rivals.