By Max Clarke

The UK economy's shock contraction of 0.5% for the fourth quarter 2010 has been revised to -0.6% in figures published today by the Office for National Statistics (ONS). Growing numbers of the Bank of England’s Monetary Policy Committee have been voting for a rise in interest rates, currently still at their record 0.5% low, to curtail inflation. The contraction will likely delay any interest rates; a move that will be welcomed by the UK’s business community.

Commenting on the revision is Jeremy Cook, chief economist at foreign exchange brokers World First:

“Once again the weather is being blamed for this weakness, but the figure is unlikely to change the minds of the members of the MPC who find themselves on the opposing sides of the interest rate debate.

“The argument for the ‘hawks’ (those who want the rate higher) is that the retail and construction releases from Q1 have been strong and inflation is proving to be a problem. However, the ‘doves’ will be saying that the recovery is not yet guaranteed.

“The market was becoming more and more certain of an interest rate hike in May before these figures, and some analysts expected a rebound higher. We think more people will now join us in the belief that the MPC will leave a rate hike until August…”

Also commenting is TUC General Secretary Brendan Barber:

"The government's hope of an upwards revision of growth has been dashed. It's time to wake up and smell an economy in big trouble. We need a plan B that doesn't send it over the edge with deep rapid spending cuts."