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UK growth revised downwards for last year

UK gross domestic product (GDP) fell by 0.3% in the fourth quarter of 2011, according to the Office for National Statistics (ONS). This follows two previous estimates of – 0.2% for the quarter. This had the effect of reducing total growth in 2011 down to 0.7% from the 0.8% earlier estimate.

UK GDP growth remains precarious

In the last quarter of 2011 output of the production industries fell by 1.3%, within which manufacturing fell by 0.7%. In the service sector output fell by 0.1%, while output in construction fell by 0.2%. However, household final consumption expenditure rose by 0.4%.

The ONS also noted that real household disposable income fell by 1.2% in 2011, the biggest drop since 1977.

The Office for Budget Responsibility (OBR) has predicted growth of 0.8% for 2012, although the Bank of England has estimated 1.0%. One thing for sure is that there is unlikely to be a smooth trajectory of growth this year. Sir Mervyn King, Governor of the Bank of England has predicted a “zig zag” of positive and negative growth.

Only yesterday he forecast that the UK economy would contract in the April to June quarter as a result of the Queen’s Diamond Jubilee bank holiday on June 5, which follows the traditional bank holiday on the Monday. There was a similar picture last year when the Royal Wedding caused a fall in output. However, Mr King does not expect the UK to slip back into recession.

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Posted in Bank of England, economic growth, GDP

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