Weak industry could make UK economy shrink

BRITISH industrial production declined sharply in November, and economists fear it may have tipped the already slow economy into contraction in the final quarter of 2011.

Production in the Eurozone also fell, declining by 0.1 per cent in November, led by falls of 9.4 per cent in Ireland and one per cent in Germany.

The UK data, published by the Office for National Statistics yesterday, shows the index of production fell 0.6 per cent in the month – its ninth consecutive fall, taking the 12-month decline to 3.6 per cent.

Meanwhile manufacturing, which excludes sectors like mining, saw a 0.2 per cent fall in output in November and a 0.6 per cent on the year.

As an individual industry, mining and quarrying output fell by 14.2 per cent compared with November 2010.

Water supply and waste management expanded output the most, rising 3.7 per cent on the year.

“The contraction in industrial production looks set to take 0.2 percentage points off the quarterly rate of GDP growth,” said George Buckley of Deutsche Bank.

“We expect a small contraction in GDP in the fourth quarter of 2011.”