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London - Britain's economy edged closer to recession in the last three months of 2011 after output contracted for the first time in a year, official data showed on Wednesday.
The figures are likely to reinforce expectations the Bank of England (BoE) will inject more stimulus into the economy next month after BoE governor Mervyn King warned of an arduous recovery ahead.
The Office for National Statistics said gross domestic product (GDP) fell 0.2% in the fourth quarter after growing by 0.6% in the third quarter of 2011 - worse than economists' forecasts for a 0.1% contraction.
The decline is also slightly bigger than that expected by the BoE and the independent Office for Budget Responsibility, which assesses whether the government's fiscal plans are sustainable.
For 2011 as a whole, GDP expanded by 0.9%, less than half the pace recorded in 2010.
On the year, fourth-quarter output was 0.8% higher, flattered by a sharp fall in output in the year-ago quarter due to heavy snow.
The fourth-quarter contraction in output follows a 0.25% decline in German GDP, and if UK output falls in the first three months of 2012, Britain will enter its second recession in three years.
The figures increase the chance that the BoE will approve a further £50bn of quantitative easing in February, once the current £75bn of purchases started in October are complete.
King said on Tuesday that the central bank had scope to give the economy another cash boost if needed as inflation is falling and Britain faces an "arduous, long and uneven" economic recovery.
Minutes to January's bank policy meeting, scheduled for release at 09:30, will shed further light on the stance of the BoE, which forecasts economic stagnation until mid-2012.
The contraction will be a blow to the Conservatives, who are facing growing criticism from the Labour Party over their flagship five-year austerity programme.
Labour has accused the government of focusing too much on spending cuts rather than boosting growth as a way to reduce record public debt levels, which breached the £1 trillion barrier in December.
Economists are generally split as to whether the economy will continue to contract in early 2012, but all stress that any decline will be modest compared to the record 7.1% fall in output in Britain's last recession in 2008-09.
Wednesday's data showed that manufacturing, electricity and gas, and distribution, hotels and restaurants were the main contributors to the fall in output, each subtracting 0.1% from GDP.
Manufacturing output fell 0.9% on the quarter, its biggest drop since Q3 2009.
Utilities output was down 4.1%, its biggest fall since the start of 2011 as mild weather reduced demand.
Output in the services sector, which accounts for 76%t of GDP, was flat on the quarter, its weakest outturn since Q4 2010. The effect of a 0.4% rise in government and other services was cancelled out by a 0.5% decline in the distribution, hotels and restaurants sector, which includes retail.
The figures are likely to reinforce expectations the Bank of England (BoE) will inject more stimulus into the economy next month after BoE governor Mervyn King warned of an arduous recovery ahead.
The Office for National Statistics said gross domestic product (GDP) fell 0.2% in the fourth quarter after growing by 0.6% in the third quarter of 2011 - worse than economists' forecasts for a 0.1% contraction.
The decline is also slightly bigger than that expected by the BoE and the independent Office for Budget Responsibility, which assesses whether the government's fiscal plans are sustainable.
For 2011 as a whole, GDP expanded by 0.9%, less than half the pace recorded in 2010.
On the year, fourth-quarter output was 0.8% higher, flattered by a sharp fall in output in the year-ago quarter due to heavy snow.
The fourth-quarter contraction in output follows a 0.25% decline in German GDP, and if UK output falls in the first three months of 2012, Britain will enter its second recession in three years.
The figures increase the chance that the BoE will approve a further £50bn of quantitative easing in February, once the current £75bn of purchases started in October are complete.
King said on Tuesday that the central bank had scope to give the economy another cash boost if needed as inflation is falling and Britain faces an "arduous, long and uneven" economic recovery.
Minutes to January's bank policy meeting, scheduled for release at 09:30, will shed further light on the stance of the BoE, which forecasts economic stagnation until mid-2012.
The contraction will be a blow to the Conservatives, who are facing growing criticism from the Labour Party over their flagship five-year austerity programme.
Labour has accused the government of focusing too much on spending cuts rather than boosting growth as a way to reduce record public debt levels, which breached the £1 trillion barrier in December.
Economists are generally split as to whether the economy will continue to contract in early 2012, but all stress that any decline will be modest compared to the record 7.1% fall in output in Britain's last recession in 2008-09.
Wednesday's data showed that manufacturing, electricity and gas, and distribution, hotels and restaurants were the main contributors to the fall in output, each subtracting 0.1% from GDP.
Manufacturing output fell 0.9% on the quarter, its biggest drop since Q3 2009.
Utilities output was down 4.1%, its biggest fall since the start of 2011 as mild weather reduced demand.
Output in the services sector, which accounts for 76%t of GDP, was flat on the quarter, its weakest outturn since Q4 2010. The effect of a 0.4% rise in government and other services was cancelled out by a 0.5% decline in the distribution, hotels and restaurants sector, which includes retail.
