By Max Clarke
The Nation’s GDP fell by 0.5% for the final quarter of 2010- a figure recently revised up from the previously stated 0.6%, figures published today by the Office for National Statistics (ONS).
“These figures are marginally better than the previous estimate. Although they do not alter the broad picture, there is now a welcome upward revision to the earlier estimate for business investment,” commented David Kern, chief economist at the British Chambers of Commerce.
Jeremy Cook, chief economist at World First also commented on the GDP revision:
“While this is a big improvement, it’s still not a cause for wild celebrations. The economy is still in a real state and indications from consumer trends are that a meteoric bounce back in Q1 is unlikely.
The ONS’ report, entitled GDP and the Labour Market: Comparing Lessons, compares dynamics for the UK’s 3 latest recessions- in terms of GDP and employment. Other findings from the report show:
Q4 2010’s GDP reduction followed four consecutive quarters of growth, and while unemployment rose by 0.2% at the end of 2010, it had declined by 0.8% during early 2010.
That UK economic output remains below levels at the start of the recession, while for the preceding two recessions, output had returned to pre-recession highs within three years.
Continued Kern: “we are now seeing an unchanged position over the quarter compared with the previous estimate of a large decline. The fall in GDP in the fourth quarter of last year is now estimated at 0.5 per cent rather than 0.6 per cent, and there was a significant weather-related decline in output, while the underlying trend was broadly stagnant. We are encouraged to see a smaller decline in services than was expected, but the sector’s performance is still disappointing.
“Although there have been positive signs that the economy has returned to positive growth in the first quarter of this year, the improvement is not as strong as we had hoped. The UK economy is clearly still facing many challenges in the months ahead.
"The Government must persevere with a tough deficit-cutting plan that will dampen domestic demand, while international uncertainties will leave British exporters facing mounting difficulties. Given this background, it is important for the Government to translate the positive messages delivered in the Budget into real action. On its part, the MPC must not increase interest rates prematurely to avoid risks of an economic setback.”