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UK contraction worse than thought UK GDP figure revised down further
(40 minutes later)
The UK economy shrank by more than previously thought during the last three months of 2010, revised figures suggest. 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. 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.Its initial estimate had suggested the economy had contracted by 0.5% - with heavy snow blamed for the slump.
The data may mean a rise in interest rates will not come as soon as thought. However the ONS said that the revision was not a dramatic one.
href="http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2011/mpc1102.pdf" >Documents from the bank of England's ratesetters, 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 revised GDP figures, suggested the economy had picked up. "Its not that much of a shock, this is a very small revision," the organisation's chief economist Joe Grice told BBC News.
But this surprise data paints a gloomier picture of the UK economy. "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.
'Disappointing'
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 revised data may affect how quickly the Bank of England moves to raise interest rates.
Documents from the Bank'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, suggested the economy had picked up.
Three of the bank's policymakers voted for a rate rise, with the remaining six MPC members voting to keep rates at historic 0.5% lows.
Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.