GDP figures confirm gloomy outlook

THE UK economy contracted in the last quarter of 2011, according to new figures.

GDP fell by 0.2% at the end of last year following 0.6% growth in the third quarter.

The figures add to pressure on the Government and the Bank of England to take further action to stimulate the economy.

A negative figure for the first quarter of 2012 would put the UK economy back in technical recession.

Many analysts were already forecasting a further expansion of the Bank of England’s quantitative easing programme and the latest GDP figures could hasten that decision when the Monetary Policy Committee meets next month.

The Office for National Statistics said that output from production industries, which includes manufacturing, fell by 1.2%. Construction output fell 0.5% while the services sector saw no change.

North West Region Director at EEF, the manufacturers’ organisation, David Ost said: “Clearly the turbulence in manufacturers’ major markets in Europe has gone past depressing only sentiment and is now holding back production.

“While there is little sign that this uncertainty will come to an end any time soon, we can take some heart that output appears to have begun growing again in December.”

Dr Brian Sloan, chief economist at Greater Manchester Chamber of Commerce, said the GDP figures were “disappointing, but not wholly unexpected” and will exacerbate concerns that the country is re-entering recession.

He said to restore business confidence the Government needs to supporting regional economies better through infrastructure investment with the Northern Hub rail scheme given more prominence.

“We do, however, urge the Government and Bank of England to act faster on plans outlined in the Autumn Statement and to look again at really getting behind regional infrastructure plans.

“As a whole Greater Manchester continues to see growth but, set against a far weaker North West picture and near term deterioration in demand, more should have been done sooner.”