UK GDP figure revised down further

Source - BBC

 

The UK economy shrank by more than previously thought during the last three months of 2010, revised figures show.

 

Gross domestic product (GDP) slipped by 0.6% in the period, according to fresh data from the Office for National Statistics (ONS).

 

Its initial estimate had suggested the economy had contracted by 0.5% - with heavy snow blamed for the slump.

 

However the ONS said that the revision was not a dramatic one.

 

"It's not that much of a shock, this is a very small revision," the organisation's chief economist Joe Grice told BBC News.

 

"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."

 

The ONS statement added that manufacturing appeared to have done quite well, but that the construction industry was weak. The services sector, which accounts for a large percentage of the economy, contracted.

 

GDP figures for a particular quarter are produced first as a so-called "flash" estimate, and are later revised at least twice as more detailed information is collated.

 

 

It wasn't a bad dream. The recovery really did stall in the final three months of 2010, and it wasn't only the weather. That is the most important conclusion to be drawn from today's second round of GDP estimates for the fourth quarter”

 

 

Stephanie Flanders

 

Labour has criticised the the introduction of a VAT rise and the government's plans to dramatically cut public spending while the recovery remains fragile.

 

But a Treasury spokesman said it stood by its position.

 

"The chancellor said that the fourth-quarter growth figures were disappointing and today's revision doesn't change that fact.

 

"It also doesn't change the need to deal with the nation's credit card - the country is borrowing more this year than is spent on the entire NHS.

 

"What's more, the survey data so far this year has exceeded expectations."

 

The BBC's economics editor, Stephanie Flanders, said: "Those looking for bad news in these figures (and that is usually everyone) might do better looking beyond the first page, to the trade and investment tables towards the back.

 

"Investment was 2.5% down on the previous quarter, and was a key factor in the slowdown."

She added that net trade, once again, made a negative contribution to the recovery - exports growing 2.3%, but imports up 3%.

 

Howard Archer, chief UK and European economist at IHS Global Insight, took a gloomy view, calling the figure "a hugely disappointing set of data".

 

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

 

Equally, as Vicky Redwood, an analyst Capital Economics, said, figures showing a worsening economics performance may cause a change of heart among those previously in favour of raising rates.

 

"The slight downward revision might give the more hawkishly inclined members of the MPC reason to pause for thought," she said.

 

Three of the bank's policymakers voted for a rate rise at the last meeting, with the remaining six Monetary Policy Committee (MPC) members voting to keep rates at historic 0.5% lows.

 

Minutes from the MPC's last meeting stressed that recoveries from recession were rarely smooth, so more weakness would not be unusual - but it also said growth could pick up in the first quarter if the level of activity returned to normal after the snow, helped along by postponed expenditure.

 

The MPC will be watching closely to see how the economy has been performing so far this year, without the influence of severe weather.

 

Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.

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So, are we going to continue along this ridiculous path of the likes of Gideon and all these "economics gurus" trying to tell us it was all the fault of the snow and that we shouldn't worry too much about the possibility of a double dip, or should we get real and see this is an actual danger that Double Dip is a very real possibility now... I may be wrong, but I'm sure all these "academics" and "economists" were telling us that the figure was going to be eventually revised UP a point or two, now DOWN... So, errr, it's actually worse than they thought in the end....

 

 

 

 

I think there's one more revision to go before the final figure. Whether there is or not, the final figure will be bad.

Meanwhile, the American economy grew by 0.7%, and all the other major European economies showed strong growth too.

 

Ironically, though, the bad snow may have actually saved Osborne from an official double-dip recession - there will be a limited bounceback effect in this quarter's growth figures due to construction projects that were delayed from before Xmas due to the snow... I expect the first quarter of this year to show about 0.2% growth because of that (inspite of the VAT rise) - whereas, had there not been snow, last quarter wouldv'e shown a contraction of about 0.1% and I think this quarter would've been about the same, enough to tip us back into recession.

So they are still blaming it on the snow? What a bunch of f***ing morons

 

 

Just look at the USA, they had huge snow falls that were far bigger than ours and their economy managed to Grow!