June 18, 2013
UK fears recession as economy shrank in 2012
Britain's economy contracted by 0.3 percent in the last quarter of 2012 as first thought, keeping alive the danger of a third recession since 2008, although yearly growth was revised up, data showed.
The weak economy and its detrimental impact on the government's fiscal targets prompted rating agency Moody's to strip Britain of one of its coveted triple-A credit ratings last week.
Chanellor George Osborne will draw little comfort from the latest release, less than a month before he is due to lay out his budget plans for the coming year.
"It really underlines that the growth trajectory into this year is at best weak and could even be falling," said David Tinsley, economist at BNP Paribas.
"The fact that business investment was weak and also revised down for the third quarter was disappointing," he added.
Gross domestic product fell by 0.3 percent in the October-December period compared with the previous three months, in line with the Office for National Statistics' initial estimate and economists' forecasts.
"With political tensions rising in the euro zone due to the inconclusive Italian elections, low consumer confidence at home, signs of still weak bank lending and businesses remaining reluctant to invest due to economic uncertainty, none of the main causes of weak growth have been resolved," said Chris Williamson at Markit.
Still, compared with the previous year, the economy was 0.3 percent bigger - better than the original estimate of flat output, the ONS said, noting upward revisions to some previous quarters.
Consumer spending rose 0.2 percent on the quarter, while exports fell 1.5 percent and imports dropped 1.2 percent.