UK GDP Figures Revised Down

According to revised data from the Office for National Statistics (ONS), the UK economy shrank even more than expected in the final three months of 2010.

The figures show that gross domestic product (GDP) slipped by 0.6% during that period, revised down from the previously estimated fall of 0.5 per cent. GDP in the fourth quarter of 2010 is now 1.5 per cent higher than the fourth quarter of 2009.

The ONS believe the heavy snow was to blamed for the slump. They said: "The snow effect we think is still 0.5%. On the basis of that, the economy is still flattish at minus 0.1%. The overall picture is still a flattish underlying economy in the fourth quarter."

Although they reported that the manufacturing industry did quite well, they added that the construction industry was weak. Output in the service industries was revised down to a fall of 0.7 per cent in the latest quarter from a fall of 0.5 per cent reported in the preliminary estimate.

The decline this quarter was driven by a fall in business services of 1.1 per cent, together with a fall of 1.4 per cent in transport, storage and communications services.

The revised data may now affect how quickly the Bank of England raises interest rates.

Documents released on Wednesday from the Bank's rate-setters hinted that those who had opposed a hike in rates this month would consider a change in stance if the GDP figures suggested a growing economy.

Worries are now mounting over the recent pick-up in inflation by rising commodity prices and the VAT increase.


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