Latest GDP figures confirm fears over economy

THE UK economy contracted in the last quarter of 2011 confirming the fears of many analysts.

New figures show GDP fell by 0.2% in the final three months of the year following 0.6% growth in the third quarter.

The figures released today by the Office for National Statistics show a fall in both manufacturing output and the production of gas and electricity.

Output in the production industries decreased by 1.2% in the period, compared with an increase of 0.2% in the previous quarter.

Construction sector output decreased by 0.5%, compared with an increase of 0.3% in the previous quarter.

Output in the service sector was unchanged in Q4, following a rise of 0.7% in the previous quarter.

GDP in volume terms increased by 0.8% in Q4 2011 compared with Q4 2010.

The figures, although in line with expectations, are likely to 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.