viernes, 25 de febrero de 2011

UK GDP figure revised down further

 Shopkeepers try to clear snow Bad winter weather is blamed for the bulk of the UK economy's contraction at the end of 2010 The UK economy shrank by more than previously thought during the last three months of 2010, revised figures show. Gross domestic product (GDP) slipped by 0.6% in the period, according to fresh data from the Office for National Statistics (ONS).
Its initial estimate had suggested the economy had contracted by 0.5% - with heavy snow blamed for the slump.
However the ONS said that the revision was not a dramatic one.
"It's not that much of a shock, this is a very small revision," the organisation's chief economist Joe Grice told BBC News.
"The snow effect we think is still 0.5%. On the basis of that, the economy is still flattish at minus 0.1%. The overall picture is still a flattish underlying economy in the fourth quarter."
The pound fell slightly after the figures to trade at $1.607, down 0.5 of a cent. Against the euro, the pound was unchanged at 1.17 euros.  said that manufacturing appeared to have done quite well, but that the construction industry was weak. The services sector, which accounts for a large percentage of the economy, contracted.
GDP figures for a particular quarter are produced first as a so-called "flash" estimate, and are later revised at least twice as more detailed information is collated.
'Disappointing' 
Shadow chancellor, Ed Balls, said the latest figures were "disappointing".
"Of course, we should always treat one quarter's figures with caution, but it is not cautious for the Treasury to plough on regardless," he added, accusing Chancellor George Osborne of "being complacent now in refusing to accept that his choice to cut too deep and too fast is holding back our economy and putting jobs at risk".
However Chief Secretary to the Treasury, Danny Alexander, said he expected the economy to recover.
"Of course, as we have said before these figures are disappointing. We have got to deal with the fact that we have inherited an enormous budget deficit - the previous government maxed out the nation's credit card.
"But we have also got to do what we can to support the economic recovery. The early survey data suggests that the economy is able to bounce back and we are going to continue to do everything we can to support that."
The BBC's economics editor Stephanie Flanders said that while too much could not be read into the revision, there was some "bad news" in the figures, especially that which showed investment was 2.5% down on the previous quarter "and was a key factor in the slowdown".
She added that net trade, once again, made a negative contribution to the recovery - with exports growing 2.3%, but imports up 3%.
Interest rates
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Joe Grice, chief economist at the ONS: It is 'a very small downward revision'
ING economist James Knightley said he expected the economy's poor performance to continue.
"The detail shows that government spending was the only positive growth driver. This is fairly worrying given we know about the wave of fiscal austerity that is now starting to hit the UK economy, meaning that we will soon be starting to see negative figures for this component."
Meanwhile Vicky Redwood, an analyst Capital Economics, said figures showing a worsening economics performance may cause a change of heart among those previously in favour of raising rates.
"The slight downward revision might give the more hawkishly inclined members of the MPC reason to pause for thought," she said.
Documents released on Wednesday showed three of the Bank of England's policymakers voted for a rate rise at their last meeting, with the remaining six Monetary Policy Committee (MPC) members voting to keep rates at historic 0.5% lows.
The minutes from the MPC's last meeting stressed that recoveries from recession were rarely smooth, so more weakness would not be unusual - but it also said growth could pick up in the first quarter if the level of activity returned to normal after the snow, helped along by postponed expenditure.
They also hinted that those who had been against a rise in interest rates this month would consider changes their minds if GDP figures for the first three months of 2010 suggested the economy had picked up.