UK economy contracted 0.3 per cent in fourth quarter

City A.M. Reporter
GDP shrank in the fourth quarter of last year, adding to fears that the economy is headed for a triple-dip recession.

In its preliminary estimate this morning, the Office for National Statistics said that the economy contracted by 0.3 per cent in the final three months of the year, as lower output from the North Sea and manufacturers weighed on output.

The biggest driver for the fall in GDP was a 10.2 per cent quarterly drop in mining and quarrying output, the biggest since records began in 1997, driven by disruption to North Sea oil and gas fields.

Over 2012 as a whole, the ONS said that growth was flat.

Today’s figures mark a sharp fall from the 0.9 per cent rise recorded in the three months to September, which was boosted by the Olympics.

The economy is now 3.3 per cent smaller than its peak in the first quarter of 2008, recovering only about half the output lost during the financial crisis – a worse performance than other major economies.

Output in Britain's service sector – which makes up more than three quarters of GDP – was flat per cent in the fourth quarter after rising 1.2 per cent in the third.

Industrial output was 1.8 per cent lower, while construction – which accounts for less than seven per cent of GDP – grew by 0.3 per cent.