Breaking news: Bad weather leads to GDP fall

THE economy shrank by 0.5% in the final quarter of 2010 according to new figures published this morning.

Analysts had predicted a reduction in the growth in GDP from the 0.7% figure recorded in Q3 but the dip into negative territory came as a shock.

The Office for National Statistics said the change was “cleary affected by the extremely bad weather in December” and suggested without the snow disruption the picture would have been “flattish”.

The figures add to the dilemma faced by the Bank of England’s Monetary Policy Committee as it comes under pressure to raise rates as inflation continues to rise.

Ministers will also face calls to revisit plans for major public spending cuts which will take effect this year.