UK Q4 economic growth figures revised upwards

| March 29, 2011 | 0 Comments

The Office for National Statistics (ONS) has today revealed the UK economy contracted by 0.5% in the October to December period – slightly better than the second estimate of 0.6% but unchanged from the first estimate.

Economists had expected the figures to remain unchanged.

Today’s estimate is the third and final reading and the GDP figure for the January to March period will be available next month.

Bad weather was attributed to the poor growth figures for the final quarter of last year after the month of December was the coldest for more than a century.

The figures will continue to present the Bank of England’s Monetary Policy Committee with a dilemma.

Despite pressure to lift interest rates to combat stubbornly high inflation, the central bank will be reluctant at this stage to lift rates when the recovery is losing momentum.

Meanwhile, the contraction in quarter four growth led the Office for Budget Responsibility (OBR) to lower its 2011 economic growth forecast to 1.7% from its previous estimate of 2.1%.

The spending cuts introduced by the Coalition Government are expected to hamper growth, according to many economists.

The cuts have received mixed responses; many have been critical of them warning that slashing the deficit too quickly could pose a threat to economic recovery and push the UK back into a recession.

However, most economists believe the cuts will hamper growth but a double-dip recession is unlikely.

A recession is defined as two consecutive quarters of negative growth.

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