Wednesday, 26 January 2011

UK Economy Goes Into Reverse

George Osborne has blamed the snow for the economic slump

By Sunil Patel

The UK economy could be on the verge of a double-dip recession after figures show GDP shrank by 0.5 percent in the final quarter of 2010.

The reduction in UK output is being blamed on the severe weather conditions at the end of December, according to the Office of National Statistics (ONS).

The ONS has also revealed that even without the two weeks of snow and ice which wrecked the plans of thousands of Christmas shoppers, economic growth would still have been stuck at zero.

The lacklustre performance in the last three months of 2010 has raised fresh fears among some economists that the country may be on the brink of a double-dip recession.

However, Chancellor George Osborne did not agree with the gr assessment, telling BBC News, “These are clearly disappointing figures, however, the statisticians tell us that the weather had a huge effect.

“We had the coldest December for a hundred years; businesses were closed and people couldn’t get to work."

The latest GDP figures also cast further doubt on the legitimacy of the coalition government’s savage spending cuts outlined for 2011.

Out of all sectors of the economy, it was the construction industry which saw the biggest fall in growth, falling 3.3 percent in the fourth quarter; this was in spite of growing by 3.9 percent in the previous quarter.

Giving his reaction to GDP figures, Shadow Chancellor Ed Balls said, “I don’t think the bad weather blew George Osborne off course if you look at the independent statistics people have said today the economy has shrunk by 0.5 percent.”

Mr Balls also said he thought the UK economy had ‘completely stalled’ because even allowing for bad weather, there would still be a flat recovery with zero growth. 

“This was an economy that was growing in the middle of the year, which has now ground to a halt,” he added.

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