UK economic contraction estimate unchanged, says ONS

The UK economy contracted at the end of 2012 in line with previous estimates as industrial production posted its biggest quarterly fall since early 2009, official data has shown.

The Office for National Statistics said gross domestic product dropped 0.3% in the October-to-December period.

The contraction followed a 2.1% decline in industrial production, the biggest fall since the first quarter of 2009.

Investec analyst Philip Shaw said the figures revealed "no major surprises".

Although the ONS kept its estimate for the fourth quarter of 2012 unchanged, it revised its estimate for how much the UK economy grew during the whole of 2012 from 0.2% to 0.3%.

Last week, the independent Office for Budget Responsibility, used by the government, forecast that the UK would see growth of only 0.6% this year, half what it predicted a few months ago.

If the UK's economy shrinks in the first three months of this year, then it will have fallen back into recession again. An economy is generally considered to be in recession if it contracts for two consecutive quarters.

Analysts think it will be a close call as to whether the economy contracts in the current quarter. There are fears that the disruption caused by the recent cold weather may have pushed the economy back into recession.

The ONS also released fourth-quarter current account data, which showed that Britain's deficit with the rest of the world narrowed to £14.037bn from £15.074bn in the third quarter of 2012.

Alan Clarke, at Scotiabank, said: "It's old news really on the GDP data, but the current account figures show us that we're still terrible at exporting.

"The weaker pound is certainly not helping to rebalance the economy."

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