Jan 25 2013 By Cheryl Mullin
BRITAIN’S recovery slammed into reverse at the end of last year after the economy contracted by a worse-than-expected 0.3%, official figures revealed today.
The fall in gross domestic product (GDP) between October and December compares with 0.9% growth in the third quarter and will raise fears that the UK is on course for an unprecedented triple-dip recession.
GDP – a broad measure for the total economy – would have to contract again this quarter for the UK to be back in recession, but hopes of a rebound are starting to fade after a snow-hit start to 2013.
The Office for National Statistics (ONS) said economic output as a whole remained flat in 2012.
The fourth-quarter drop is worse than expected, with most economists forecasting a drop of 0.1%.
It deals a blow to recovery hopes after the UK bounced back from the longest double-dip recession since the 1950s in the third quarter.
But the rebound was largely driven by one-off factors, such as the Olympics, and as the economy clawed back activity lost during the Queen’s Diamond Jubilee holiday, which has skewed quarter-on-quarter changes in activity, the ONS said.
The fourth-quarter figures are preliminary estimates and subject to revision.
The latest ONS estimate increases the pressure on Chancellor George Osborne at a time when all three major ratings agencies have the country's prized AAA status on negative outlook.
A Treasury spokesman said: “The official forecast was that the UK economy would contract in the last quarter of 2012 so this figure is not unexpected. It confirms what we already knew – that Britain, like many European countries, still faces a very difficult economic situation.
“It underlines what the Chancellor said at the autumn statement and the governor of the Bank of England said this week: while the economy is healing, it is a difficult road.”
The ONS said the UK had recovered only half of the fall in GDP seen since the start of the 2008 recession, with output still 3.3% lower than its pre-recession level.