The British economy shrank in the final quarter of 2010, a shock contraction that casts doubt on the strength of growth in the industrialised world and the wisdom of early fiscal tightening.
The UK Office for National Statistics said that output fell by 0.5 per cent in the fourth quarter – worse than economists’ expected 0.5 per cent rise – and that growth would still have been zero even without heavy snow in December.
The contraction was caused by broad-brush weakness in services and consumption. Although initial output data are often revised, the UK numbers create doubt about fourth quarter data for the US that are due for release on Friday. Economists think that US growth quickened to an annualised rate of about 3.5 per cent, fuelled by a recovery in consumer spending.