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| Version 1 | Version 2 |
|---|---|
| UK economy shrinks at faster pace | UK economy shrinks at faster pace |
| (10 minutes later) | |
| The UK economy shrank even more than expected in the last three months of 2008, revised official figures show. | The UK economy shrank even more than expected in the last three months of 2008, revised official figures show. |
| The Office for National Statistics (ONS) said the economy shrank by 1.6% compared to the third quarter. | The Office for National Statistics (ONS) said the economy shrank by 1.6% compared to the third quarter. |
| That was the biggest fall in GDP (gross domestic product) since 1980 and more than an earlier 1.5% estimate. | That was the biggest fall in GDP (gross domestic product) since 1980 and more than an earlier 1.5% estimate. |
| The figures have also revealed a large jump in the proportion of household income that is being saved, producing the highest "savings ratio" since 2006. | The figures have also revealed a large jump in the proportion of household income that is being saved, producing the highest "savings ratio" since 2006. |
| Rising savings | Rising savings |
| The savings ratio surged from a negative number in the first quarter of 2008 to almost 5% by the end of the year, as people put aside money for hard times. | The savings ratio surged from a negative number in the first quarter of 2008 to almost 5% by the end of the year, as people put aside money for hard times. |
| The jump was particularly strong in the last three months of the year. | The jump was particularly strong in the last three months of the year. |
| "On the face of it this rise is good news - it means that a large portion of the necessary rebalancing of the economy away from spending and towards saving has occurred already," said George Buckley, an economist at Deutsche Bank. | "On the face of it this rise is good news - it means that a large portion of the necessary rebalancing of the economy away from spending and towards saving has occurred already," said George Buckley, an economist at Deutsche Bank. |
| Household behaviour has clearly been changing. | Household behaviour has clearly been changing. |
| A regular survey carried out by National Savings & Investments (NS&I) showed that people are now saving an average of £90 a month, up from £87 a month during 2008. | |
| The savings ratio has also been boosted by people borrowing less, with a slump last year in new mortgages, and consumers reining in their spending on credit cards and other types of borrowing. | |
| "Income from falling mortgage interest payments may particularly being saved," suggested Vicky Redwood, UK economist at the consultancy Capital Economics. | |
| Shrinking economy | Shrinking economy |
| For the year as a whole, the UK economy grew 0.7%, which was unrevised. The GDP growth rate has fallen sharply from 2007, when the UK grew at 3%. | |
| Analysts are expecting the UK economy to shrink in 2009 as whole. | Analysts are expecting the UK economy to shrink in 2009 as whole. |
| Household expenditure fell by 1%, and all the major sectors of the economy contracted. | Household expenditure fell by 1%, and all the major sectors of the economy contracted. |
| The main reason for the weaker growth was a slump in output of the construction sector. It fell 4.9% over the quarter, revised down from the initial estimate of 1.1%. | The main reason for the weaker growth was a slump in output of the construction sector. It fell 4.9% over the quarter, revised down from the initial estimate of 1.1%. |