Household spending crept up 0.5% during the last three months of 2011 and government spending grew strongly, but it was not enough to prevent the wider British economy from contracting.
The Office for National Statistics has confirmed its earlier estimate indicating that the UK economy shrank by 0.2% during the fourth quarter of last year.
The statisticians also nudged down the previous estimate for third-quarter growth, from 0.6% to 0.5%. As a result overall growth during 2011 looked a shade more anaemic at 0.8%, down from previous estimates of 0.9%.
Should the economy not return to growth in the current quarter, Britain would again be in an official recession – defined as two consecutive quarters of contraction.
Recent economic data – in the key services sector as well as manufacturing and retail sales – have suggested there is cause to believe the economy is showing signs of a rebound.
The quarter-on-quarter rise in household spending during the fourth quarter marked the first increase in 18 months, though the figure was still down 0.6% compared with the same period a year earlier. Government spending grew by 1% and exports jumped by 2.3% on the quarter.
The overall fall in GDP was largely driven by the biggest drop in business investment for a year, while the production sector, which includes manufacturing, declined 1.4% compared with previous estimates of 1.2%.
Howard Archer, an economist at IHS Global Insight, said: "There was some decent news, with consumer spending growing for the first time since the third quarter as well as exports seeing very decent growth.
"It is quite noticeable that GDP would have expanded in the fourth quarter of 2011 but for a sharp running down of stocks."
RBS economist Ross Walker described the 0.2% contraction as "a pretty poor number".
He added: "The main positive is that improvements in survey data that look increasingly broad-based have not been captured, and we will get a bounce back in the first quarter [of 2012] … I don't think it will be a spectacular first quarter but I think we will squeeze some growth out of it."
Ed Balls, the shadow chancellor, said: "With our stalled economy now in reverse, unemployment soaring, and £158bn extra borrowing to pay for this economic failure, the case for a change of course and a real plan for jobs and growth in next month's budget is growing by the day."
He added: "Since George Osborne's spending review the economy has grown by just 0.2% compared to the 3% the government predicted. And far from the eurozone crisis being to blame, only rising exports kept us out of recession last year.
In the US, where the government has taken a more balanced and steady approach to deficit reduction, their economy has more than recovered all the output lost in the global recession, while in Britain we are still almost 4% below our pre-crisis peak."
When the worse-than-expected fourth-quarter figures were first published in January, David Cameron admitted they were disappointing, but insisted there was "not an ounce of complacency" as the government sought to get Britain back on track.
Facing mounting pressure to temper spending cuts in the interests of restoring growth, the chancellor, George Osborne, stuck to his guns, saying: "I think we've got the right plan, we've got to stick to it."
guardian.co.uk
The Office for National Statistics has confirmed its earlier estimate indicating that the UK economy shrank by 0.2% during the fourth quarter of last year.
The statisticians also nudged down the previous estimate for third-quarter growth, from 0.6% to 0.5%. As a result overall growth during 2011 looked a shade more anaemic at 0.8%, down from previous estimates of 0.9%.
Should the economy not return to growth in the current quarter, Britain would again be in an official recession – defined as two consecutive quarters of contraction.
Recent economic data – in the key services sector as well as manufacturing and retail sales – have suggested there is cause to believe the economy is showing signs of a rebound.
The quarter-on-quarter rise in household spending during the fourth quarter marked the first increase in 18 months, though the figure was still down 0.6% compared with the same period a year earlier. Government spending grew by 1% and exports jumped by 2.3% on the quarter.
The overall fall in GDP was largely driven by the biggest drop in business investment for a year, while the production sector, which includes manufacturing, declined 1.4% compared with previous estimates of 1.2%.
Howard Archer, an economist at IHS Global Insight, said: "There was some decent news, with consumer spending growing for the first time since the third quarter as well as exports seeing very decent growth.
"It is quite noticeable that GDP would have expanded in the fourth quarter of 2011 but for a sharp running down of stocks."
RBS economist Ross Walker described the 0.2% contraction as "a pretty poor number".
He added: "The main positive is that improvements in survey data that look increasingly broad-based have not been captured, and we will get a bounce back in the first quarter [of 2012] … I don't think it will be a spectacular first quarter but I think we will squeeze some growth out of it."
Ed Balls, the shadow chancellor, said: "With our stalled economy now in reverse, unemployment soaring, and £158bn extra borrowing to pay for this economic failure, the case for a change of course and a real plan for jobs and growth in next month's budget is growing by the day."
He added: "Since George Osborne's spending review the economy has grown by just 0.2% compared to the 3% the government predicted. And far from the eurozone crisis being to blame, only rising exports kept us out of recession last year.
In the US, where the government has taken a more balanced and steady approach to deficit reduction, their economy has more than recovered all the output lost in the global recession, while in Britain we are still almost 4% below our pre-crisis peak."
When the worse-than-expected fourth-quarter figures were first published in January, David Cameron admitted they were disappointing, but insisted there was "not an ounce of complacency" as the government sought to get Britain back on track.
Facing mounting pressure to temper spending cuts in the interests of restoring growth, the chancellor, George Osborne, stuck to his guns, saying: "I think we've got the right plan, we've got to stick to it."
guardian.co.uk
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