U.K. Moves Closer to Recession as GDP Falls
Jan. 25, 2012, 12:42 p.m. GMT
[BLOOMBERG, by Scott Hamilton and Jennifer Ryan]'The U.K. economy shrank more than economists forecast in the fourth quarter as manufacturers cut output and services stagnated, leaving Britain on the brink of another recession
Gross domestic product fell 0.2 percent from the third quarter, when it increased 0.6 percent, the Office for National Statistics said in London today. The median forecast of 33 forecasts in a Bloomberg survey was for a drop of 0.1 percent. Public-sector strikes over pensions on Nov. 30 had “some impact” on GDP in the quarter, the statistics office said.
Bank of England Governor Mervyn King said yesterday that policy makers can increase stimulus again if needed to guard against a “renewed severe downturn.” The U.K., the first Group of Seven nation to report fourth-quarter data, may not be the last to report a contraction. Germany’s statistics office estimated GDP fell about 0.25 percent in the period and the International Monetary Fund has forecast a euro-area recession.
“While a technical recession cannot be ruled out, the signs are that the economy is turning the corner slowly,” Barclays Capital economist Blerina Uruci in London wrote in an e-mailed note today. “Nevertheless, with the euro crisis grinding on, the near-term outlook remains precarious.”
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