Mortgage News
UK GDP falls by 0.2% in fourth quarter
UK GDP for the fourth quarter of 2011 dropped by 0.2%, a worse than expected figure that will heighten fears of a double-dip recession.
Economists had predicted a fall of 0.1%. On a year-on-year basis GDP rose by 0.8%, as expected, while GDP for 2011 as a whole rose by 0.9%.
The ONS said the public sector strike seen on 30 November had “some impact” on the Q4 figure but said it was not possible to measure the effect directly and suggested the direct impact was minimal.
The ONS said production activity was down 1.2%, manufacturing fell 0.9%, construction fell 0.5% and activity was flat in the services sector on the quarter.
“Our bet is that the UK is now back in recession and that the economy will continue to contract for most of this year,” said Vicky Redwood, chief UK economist at Capital Economics.
The forecaster expects the Bank of England to announce a further £75bn of QE next month.
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Nick O’Reilly, a business recovery specialist at the chartered accountants HW Fisher & Company said the ONS number crunchers will have tried but failed to produce a positive figure.
“[This] hints at how bad things really are. Both businesses and the banks are haunted by a lingering fear of the chaos that would be caused by a eurozone collapse.
“If they were unwilling to invest for growth when the economy was just stagnating, the chances of them doing so now GDP is falling are non-existent. The UK economy is truly on the brink.”