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Fall in UK economy revised downwards

Fall in UK economy revised downwards

Category: Economy

Updated: 28/03/2012
First Published: 28/03/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The fall in the UK economy during the last three months of 2011 has been revised downwards, it has been confirmed.

The Office for National Statistics (ONS) has previously given two estimates that the economy contracted by 0.2% in the last quarter of 2011, but as more relevant data has become available, that has been changed to 0.3%.

Growth for 2011 as a whole was also revised downwards, from 0.8% to 0.7%.

The ONS said the downwards revision had been driven by output of the production industries falling by 1.3%, while the business services and finance sectors also struggled.

An official return to recession – which is measured as two consecutive quarterly falls in GDP – is likely to be side-stepped as the economy is expected to grow in the first quarter of 2012.

In addition, it was also announced that the economy contracted by 0.1% between April and June last year, down from the initial estimate of no change.

With ONS figures showing a combination of growth and decline in the economy for the last 18 months, any recovery in the economy remains hugely fragile.

The latest figures could see the Bank of England inject even more money into the economy in the coming months, it has been suggested.

"Our view is that the weakness highlighted in this release in combination with the poor production and retail sales data so far for, it is more likely than not that the economy also contracted in the first three months of this year, which would put the UK in a technical recession," said Azad Zangana, European economist at Schroders.

"In terms of monetary policy, the Bank of England will surely react to this by increasing the amount of Quantitative Easing if not at the next meeting, then certainly by May."

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