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UK GDP figure revised down further 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 show.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 (ONS).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.
However the ONS said that the revision was not a dramatic one.However the ONS said that the revision was not a dramatic one.
"It's not that much of a shock, this is a very small revision," the organisation's chief economist Joe Grice told BBC News."It's not that much of a shock, this is a very small revision," the organisation's chief economist Joe Grice told BBC News.
"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 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.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.
GDP figures for a particular quarter are produced first as a so-called "flash" estimate, and are later revised at least twice as more detailed information is collated.
'Disappointing' '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.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.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."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."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.""What's more, the survey data so far this year has exceeded expectations."
The BBC's economics editor, Stephanie Flanders, said: "Those looking for bad news in these figures (and that is usually everyone) might do better looking beyond the first page, to the trade and investment tables towards the back.The BBC's economics editor, Stephanie Flanders, said: "Those looking for bad news in these figures (and that is usually everyone) might do better looking beyond the first page, to the trade and investment tables towards the back.
"Investment was 2.5% down on the previous quarter, and was a key factor in the slowdown.""Investment was 2.5% down on the previous quarter, and was a key factor in the slowdown."
Interest ratesInterest rates
She added that net trade, once again, made a negative contribution to the recovery - exports growing 2.3%, but imports up 3%.She added that net trade, once again, made a negative contribution to the recovery - exports growing 2.3%, but imports up 3%.
The revised data may affect how quickly the Bank of England moves to raise interest rates. Howard Archer, chief UK and European economist at IHS Global Insight, took a gloomy view, calling the figure "a hugely disappointing set of data".
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. Documents from the Bank of England'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 had 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. Equally, as Vicky Redwood, an analyst Capital Economics, said, figures showing a worsening economics performance may cause a change of heart among those previously in favour of raising rates.
Minutes from the MPC's last meeting stressed that recoveries from recession were rarely smooth, so more weakness would not be unusual. "The slight downward revision might give the more hawkishly inclined members of the MPC reason to pause for thought," she said.
Three of the bank's policymakers voted for a rate rise at the last meeting, with the remaining six Monetary Policy Committee (MPC) members voting to keep rates at historic 0.5% lows.
Minutes from the MPC's last meeting stressed that recoveries from recession were rarely smooth, so more weakness would not be unusual - but it also said growth could pick up in the first quarter if the level of activity returned to normal after the snow, helped along by postponed expenditure.
The MPC will be watching closely to see how the economy has been performing so far this year, without the influence of severe weather.
Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.Worries are growing about the recent pick-up in inflation, boosted by rising commodity prices and the VAT increase.