UK economy shrank 0.3 pct in 4th quarter

[March 28, 2012]  LONDON (AP) -- Britain's economy shrank by more than anticipated in the fourth quarter of last year as households reined in their spending, official figures showed Wednesday.

The Office for National Statistics said Britain's economy contracted by a quarterly rate of 0.3 percent between October and December, up from the previous estimate of a 0.2 percent decline.

The downward revision surprised the market, which had expected no change in the estimate.

The statistics office said the revision was mainly based on lower estimates of household spending and output by Britain's big services industry.

For the full year, GDP grew by 0.7 percent, the agency said. The government expects the economy to perform only slightly better this year.

Analysts believe the economy returned to growth in the current quarter, but Bank of England Governor Mervyn King has predicted this year will be marked by a "zig-zag" of up and down quarters.

Howard Archer, chief European economist for IHS Global Insight, said he expects GDP to rise by 0.3 percent in the current quarter.

"It still looks like economic activity will be muted overall and prone to relapses over the next few months at least before growth hopefully picks up on a more sustainable basis during the second half of the year," Archer said.

[Associated Press]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.