Bad news for economy

The UK economy shrank at the end of last year. The bad news was published soon after the Bank of England and ILO warned of difficulties ahead.

The figures on gross domestic product (GDP) from the Office for National Statistics show the UK economy contracted by 0.2% in the fourth quarter of 2012, against 0.6% growth in the third quarter. Manufacturing showed a 0.9% fall in the final quarter of last year. The figures are preliminary estimates and open to revision.

Overall, the economy grew by 0.9% in 2011, way down on the 1.7% figure forecast by the Office for Business Responsibility in documents accompanying chancellor Osborne’s March 2011 Budget.

The bad news came just a day after Mervyn King, governor of the Bank of England, warned that the path to economic recovery in the UK is “likely to be arduous, long, and uneven".

Earlier, the UN’s International Labour Office (ILO) piled on the pressure as it warned that the UK risked falling back into recession as the global jobs crisis continues unabated. Their study suggested economic activity had slowed across the eurozone, further lowering growth and increasing the chance of a double-dip recession in economies such as the UK, Germany and Spain.

www.ons.gov.uk/ons/dcp171778_254088.pdf

www.bankofengland.co.uk/publications/speeches/2012/speech541.pdf

http://www.ilo.org/global/lang--en/index.htm