UK Economy suffers shock contraction over the last 3 months
Economists were expecting the economy to remain stable in the last quarter of 2010, few were anticipating the shock 0.5% decrease recently revealed.
The latest GDP figures released by the office of National Statistics (ONS) have raised concerns over prospects for the economy in 2011. The fall follows growth of 0.7% in the previous 3 months and 1.1% in the second quarter of 2010.
The Office of National Statistics (ONS) has suggested “GDP was significantly affected by the bad weather we saw in December” but is said to be optimistic that the snow will only cause a temporary impact on growth.
The construction industry was the biggest contributor to the fall with activity decreasing by 3.3% in the quarter. Other industries hit hard include the transport sector and hotels and restaurants.
Phil Smith, Partner, Moorfields “The government is naturally disappointed by the reduction, as it shows we still have some way to go before the economy returns to a healthier position. We hope that the public sector cuts and VAT increase will not weaken the economy further in 2011”.
Simon Thomas, Partner, Moorfields “The disappointing figures will obviously leave many companies feeling uncertain about the economy. It is important that businesses carefully consider their strategies in 2011, as identifying issues at an early stage will maximise the options available.
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