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UK economy shrank more than expected in Q4

Mar 28 2012 15:44 Reuters

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London - Britain's economy shrank 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 (ONS) said the economy contracted by 0.3% between October and December last year, taking the annual rate of growth to 0.5%.

Economists had expected unrevised readings of -0.2% quarter-on-quarter and 0.7% 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% 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%, the biggest drop since 1977.
uk economy  |  interest rates  |  recession  |  manufacturing

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