UK Economy Shrinks By 0.3%

28 March 2012 14:30 - Florence Fullalove


UK Economy Shrinks By 0.3%

The Office for National Statistics has said that the UK economy shrank by 0.3% in the last quarter of 2011. This figure, which was worse than the 0.2% expected, is said to have been driven by a weak services sector. Communication, transport, business services and the financial sector all contributed to this result.  The fall in GDP was largely driven by falling business investment. This contraction of gross domestic product between October and December takes the annual growth rate for 2011 to 0.5%. Economists have predicted readings of -0.2% quarter on quarter and 0.7% year on year. Household spending was also not as strong as previously thought, growing by 0.4% rather than 0.5%.

It seems many are divided as to whether this disappointing results signals that Britain will fall back into a double-dip recession. Some has argued that there has been positive news for economy in the first few months of 2012 and the UK will not plunge back into recession. However, shadow chancellor Ed Balls attacked George Osborne’s spending cuts and tax strategy. He said, “It’s very worrying news that the economy shrank even more than we thought at the end of last year.” He added, “These revised figures show that since George Osborne’s spending review our economy has flat-lined and not grown at all.”


Related Links :
Office For National Statistics - Economic Review - March 2012
HM Treasury - Newsroom
Economic Calendar - Scheduled economic events
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