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British economy shrinks 0.2% in Q4 2011
Fri Feb 24, 2012
New figures have confirmed that Britain’s economy contracted 0.2 percent in the final quarter of 2011, while growth for the year as a whole was lower than previously thought.
The Office for National Statistics' (ONS) second estimate showed that gross domestic product (GDP) for the final quarter remained unchanged.
The fall in GDP was largely driven by the biggest drop in business investment for a year, while the production sector, which includes manufacturing, declined 1.4 percent compared with previous estimates of 1.2 percent.
But the UK's GDP growth for 2011 as a whole was revised down to 0.8 percent from 0.9 percent in its previous estimate after growth in the first and third quarters was weaker than previously thought.
The figures will add to fears that the UK could head back into recession - defined as two successive quarters of GDP falls.
"Unless the eurozone debt crisis escalates, the coming year is therefore likely to see modest growth. However, there will no doubt be high volatility in the GDP numbers due to factors such as the Olympics and additional bank holiday for the Queen's Jubilee", said Chris Williamson, chief economist at Markit.
The fall in industrial production was worse than previously thought, with electricity and gas supply falling by 5.1 percent as the mild autumn weather caused households to turn down their central heating.
The news came as partly state-owned Lloyds Banking Group and state-rescued Royal Bank of Scotland both posted massive net losses for 2011.
Lloyds posted a loss worth 2.8 billion pounds. The Royal Bank of Scotland has announced a net loss of nearly two-billion pounds.