United Kingdom: Fourth quarter contraction confirmed at 0.3%
February 27, 2013
In the fourth quarter, GDP contracted at a seasonally adjusted 0.3% over the previous quarter, according to the second estimate released by the Office for National Statistics (ONS) on 27 February. The reading confirmed the preliminary estimate from 25 January and contrasted the 1.0% rise observed in the third quarter. Compared to the same period the year before, the economy expanded 0.3% (previously reported: 0.0% year-on-year), which represents an improvement over the 0.2% rise tallied in the third quarter. In the full year 2012, the economy expanded 0.2%, below the 0.9% rise tallied in 2011.
The deterioration was mostly driven by a weaker external sector. Exports fell 1.5% (Q3 2012: +1.7% quarter-on-quarter), while imports declined 1.2% (Q3: +0.3% qoq), prompting the net contribution from the external sector to overall growth to swing from plus 0.4 percentage points in the third quarter to minus 0.1 percentage points in the fourth.
On the domestic side, private consumption grew 0.1% (Q3: +0.1% qoq) while government consumption rose 0.6% (Q3: +0.5% qoq) in the fourth quarter. Fixed investment, on the other hand, fell 0.4% (Q3: -0.6% qoq).
In its latest inflation report from February, the Bank of England (BoE) projects GDP to increase 0.9% this year and 1.6% in 2014. FocusEconomics Consensus Forecast panellists expect the economy to expand 0.9%, which is unchanged from the previous month's estimate. For 2014, the panel sees growth accelerating to 1.5%, which is below both the forecast produced by the BoE and the 2.0% projected by the Office for Budget Responsibility (OBR).