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UK GDP falls 0.5 per cent in fourth quarter

The UK’s output fell 0.5 per cent in the fourth quarter of 2010 and grew less than expected in the third quarter, according to the Office for National Statistics.

The ONS revised economic growth in the third quarter down from 0.8 per cent to 0.7 per cent while publishing the latest fourth quarter figures, which are much worse than anticipated.

The figures are likely to encourage those who want the Bank of England to keep interest rates on hold so as not to damage UK’s growth prospects, despite the recent high inflation.

Output in the production and service industries was revised down to 0.5 per cent respectively in the latest quarter. Construction output was also revised down to 3.9 per cent from 4 per cent.

Manufacturing was up 1.1 per cent, but mining was down 1.7 per cent and utilities were down 0.5 per cent. Inventories rose £300m on the quarter. UK’s trade deficit in real terms remained at £9.7 billion at the end of last year. Exports of goods and services rose 1.5 per cent. Imports rose 1.7 per cent.

Schroders European economist Azad Zangana says: “These are a disappointing set of numbers and should dash any threat of a rise in interest rates in the near future.

“With one negative quarter being recorded, should the economy contract over the first three months of 2011, then the UK would head back into a technical recession – something the UK has been very prone to in the past.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The heated debate regarding the need to raise interest rates is based on old thinking, we are entering a new age, in the history of the human race we have never before had a demographic profile the like of which we are now entering, and this is coupled with a shift in the balance of global economic power, and shortages of resources including fuel and food, all of which will directly impact the UK economy, never before has “past performance is not an indicator of future performance” been more true.

  2. We will now see more QE.

    No interest rate rise is possible.

    Inflation will continue to run high if not higher.

    The Banks are still not lending to companies to invest.

    The state is stealing your wealth by creating dud money , allowing Inflation to run high and then it has the gall to increase increase your contribution to a corrupt EU make huge loans to Irish Banks equal to the UK cuts and then increase fuel duty and taxes in addition.

    But it is OK as the Banks, FSA and other elites all have their bonus pool to fall back on.
    They after all all in it together.

  3. @ Mr Fisher

    You like me are probably spending too much time on Zero Hedge, but sadly its all true. Viva Iceland

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