UK Economy Suffers Shock Contraction, Huge Fall In Oil

– Huge Fall In Oil After Shock UK GDP Contraction (The Business Insider)

Britain’s economy shrank unexpectedly in the final three months of the year as heavy snow compounded a slowdown in growth.

Heavy snow and a sharp drop in contruction knocked the economy in fourth quarter. Photo: Reuters

Gross domestic product fell 0.5pc in the fourth quarter, the most in more than a year, the Office for National Statistics reported on Tuesday. The decline compared with growth of 0.7pc in the third quarter.

The news sent the pound sliding and pushed shares lower in London, reigniting fears of a double dip recession as the Coalition begins its austerity drive.

“This is a horrendous figure. An absolute disaster for the economy,” said Hetal Mehta, an economist at Daiwa Capital Markets Europe.

“We knew that retail sales were heavily affected and that services output would be weak, but the collapse in construction was a major contributor the downside surprise.”

Construction, which boosted growth in the second and third quarters, dropped 3.3pc, while services slid 0.5pc.

11:07AM GMT 25 Jan 2011

Source: The Telegraph