Britain economy shrank by 0.3 per cent in 2011 last quarter
The UK economy contracted more in the last quarter of 2011 than initially estimated with services sector showing a slight decline as against the flat growth initially thought, the Office for National Statistics said Wednesday.
Revised figures show that UK gross domestic product (GDP) - a broad measure for the total economy - shrank by 0.3% in the October-December quarter last year, down from the initial estimate of a 0.2% decline.
Coming a week after the budget, the ONS said there had been a slight 0.1% decline in the services sector, which was initially thought to have been flat, while household spending had also slipped.
Output from the production sector suffered the greatest fall in the quarter, down by 1.3%, including a fall of 0.7% from manufacturing industries. Construction sector output also fell by 0.2%.
However, the ONS calculates that output from government and other services, including public spending, rose by 0.4% in the same period, due to increases in health expenditure.
The report also revised down total economic growth for all of 2011 from 0.8% to 0.7%.
The updated figures got some economists wondering whether the country is in for a second consecutive contraction in the first quarter of 2012, which could mean the UK economy was in recession.
Most economists however remained optimistic that the country would avoid another recession - defined as two quarters of back-to-back contraction - by returning to growth in the first quarter of 2012 after stronger industry data in recent months.
But as households continue to be squeezed by rising unemployment and the pay fails to keep pace with the rising cost of living, there is also apprehension that the economy could remain remain sluggish during the first half of the year,.
The government's independent watchdog, the Office for Budget Responsibility, estimates growth of just 0.8% for 2012.
Shadow chancellor Ed Balls said: "What the figures show is not only did the economy shrink at the end of last year but there's been no growth at all since the spending review 18 months ago."
This is made evident by the lack of growth in jobs, and government borrowing expected to be 150 billion pounds more than planned.
"What it shows is George Osborne's plan is not working. We need action to get the economy moving, to get jobs being created - it's the only way to get the deficit down. Last week's Budget was not only unfair, there is a gaping hole where there should be an economic plan," said Balls.
Giving a more optimistic picture, the Centre for Economics and Business Research said that a 'flurry of positive economic data and encouraging policy announcements have indicated that the UK is likely to avoid technical recession in 2012".
Daniel Solomon, an economist at the CEBR, said: "Currently, we expect GDP to grow by 0.4% over the year. This is due to domestic and foreign loose monetary policy and falling inflation."
Source: Caribbean News.Net
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