Economy shrank in last quarter of 2012

Britain's recovery slammed into reverse at the end of last year after the economy contracted by a worse-than-expected 0.3%, official figures revealed today.

The fall in gross domestic product between October and December compares with 0.9% growth in the third quarter and will raise fears that the UK is on course for an unprecedented triple-dip recession.

GDP - a broad measure for the total economy - would have to contract again this quarter for the UK to be back in recession, but hopes of a rebound are starting to fade after a snow-hit start to 2013.

The Office for National Statistics said economic output as a whole remained flat in 2012.

The fourth-quarter drop is worse than expected, with most economists forecasting a drop of 0.1%.

It deals a blow to recovery hopes after the UK bounced back from the longest double-dip recession since the 1950s in the third quarter.

But the rebound was largely driven by one-off factors, such as the Olympics, and as the economy clawed back activity lost during the Queen's Diamond Jubilee holiday, which has skewed quarter-on-quarter changes in activity, the ONS said.

The fourth-quarter figures are preliminary estimates and subject to revision.

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12:01pm Fri 25 Jan 13

Dr Strangelove says...

Wrecking the UK economy to keep house prices high, is it worth the damage to the wider economy?
Wrecking the UK economy to keep house prices high, is it worth the damage to the wider economy? Dr Strangelove

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