The UK economy shrank in the final quarter of 2012 in line with previous estimates
industrial production posted its biggest quarterly drop since early 2009,
official data has shown.
Office for National Statistics said GDP (gross
domestic product) fell 0.3% in the October-to-December period while
the contraction followed a 2.1% decline in industrial production, the biggest
fall since the first quarter of 2009.
Compared with a year earlier, GDP grew 0.2%, slightly less than estimated
Among the main contributors to the decrease in GDP in the latest quarter were
gross fixed capital formation which fell by 0.2% in volume terms and the £6.0bn
net trade deficit, which follows a £5.3bn net trade deficit in the previous
Last week, George Osborne, the chancellor of the exchequer,
said the independent Office for Budget Responsibility, used by the
government, forecast that the UK would see growth of only 0.6% this year, half
what it predicted a few months ago.
If the UK's economy contracts this quarter, then it will
have fallen back into recession again. An economy is generally considered to be
in recession if it contracts for two consecutive quarters.
Separate fourth quarter current account data showed that the UK deficit with the
rest of the world stood at £14.037bn sterling - - above forecasts.
Commenting on the UK balance of payments figures released today by the ONS Chris
Cummings, chief executive of TheCityUK, a financial and related professional
“The financial services sector continues to drive the UK’s economic growth, and
makes the largest single contribution of any sector to the UK’s net exports.
However, the weakness in the international economy is reflected in the decrease
of the sector’s trade surplus for 2012 to £44.9bn, down by 4% from £46.6bn in
“More needs to be done to support UK companies as they seek opportunities for
growth, which is why we are pleased to be part of the Government’s new Financial
Services Trade and Investment Board (FSTIB). The FSTIB brings together HM
Treasury, UK Trade & Investment and TheCityUK to identify global trade and
investment priorities and support UK based firms as they pursue them.
“The FSTIB will help the UK compete more effectively in the countries and
regions that offer the most opportunities for growth, from the BRICS nations and
GCC countries to Asian and Latin American economies. However, it’s also crucial
that the Government supports these international efforts by maintaining a
competitive domestic environment through appropriate tax and regulation, and
investment in skills development and infrastructure.”
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