25th January 2012
The official first guess that GDP declined by 0.2% in the fourth quarter is within the margin of error of a flat economy. There may have been a small depressing effect on the number from a combination of mild weather, the public sector strike and one fewer working day in the quarter compared with the prior four years. (Mean temperatures in October, November and December were above long-term averages, contributing to lower electricity and gas consumption.)
GDP is estimated to have risen by only 0.9% in 2011 but there was a big drag effect from the North Sea – the onshore economy grew by 1.4%.
Business surveys and labour market indicators suggest marginally firmer activity as the quarter ended. The hope is that the economy will benefit from global lift and an abatement of the inflation squeeze on consumers and businesses as 2012 progresses. Inflation, however, may fall by less than the Bank and consensus expect – see my post last week – while monetary trends have yet to show significant improvement (December numbers are released next week).
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