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UK economy shrank at end of 2012 UK GDP: Economy shrank at end of 2012
(35 minutes later)
The UK economy shrank in the last three months of 2012, further fuelling fears that the economy could re-enter recession. The UK economy shrank by 0.3% in the last three months of 2012, further fuelling fears that the economy could re-enter recession.
The Office for National Statistics (ONS) said the economy contracted 0.3% in the October to December quarter. The Office for National Statistics (ONS) said the fall in output was largely due to a drop in mining and quarrying, after maintenance delays at the UK's largest North Sea oil field.
The economy had grown by 0.9% in the previous quarter, boosted by the London 2012 Olympic Games.The economy had grown by 0.9% in the previous quarter, boosted by the London 2012 Olympic Games.
For the whole year, growth was flat, the ONS said, adding that the "bumpy economy" was on a "sluggish trend". For the whole year, growth was flat.
Manufacturing fell by 1.5% in the quarter, the services sector was flat, but construction output rose by 0.3%. The ONS said that the "bumpy economy" was on a "sluggish trend".
This is the first estimate of how the economy performed in the fourth quarter, and is subject to two further revisions. Manufacturing fell by 1.5% in the fourth quarter, the services sector was flat, but construction output rose by 0.3%.
Within the manufacturing sector, mining and quarrying output fell by 10.2%, the biggest decline since records began in 1997, driven by disruption to North Sea oil and gas fields.
One thing is clear - yesterday's market rumours of a leak of the GDP data with a positive figure were misguided.
The fall of 0.3% in the fourth quarter was more or less in line with expectations, although many analysts thought it might be closer to zero.
The ONS pointed out that North Sea maintenance had hit oil and gas extraction, and that excluding that the slide in output was 0.1%. Construction, previously a section of the economy on the slide, was back in positive territory with a rise of 0.3%. But the dominant services sector was flat with a post Olympic hangover.
In the words of the ONS, the underlying picture was flat over 2012, with the economy working well below its potential.
If oil and gas extraction were excluded from the overall gross domestic product (GDP) calculations, then the data would have shown that the economy shrank by only 0.1% in the fourth quarter, the ONS said.
GDP is the sum of all goods and services made in the economy.
This is the first estimate of how the economy performed in the fourth quarter, and is subject to at least two further revisions as further data is collected.
"It confirms what we already knew - that Britain, like many European countries, still faces a very difficult economic situation," the Treasury said in a statement.
"While the economy is healing, it is a difficult road."
But Jonathan Portes, an economist from the National Institute of Economic and Social Research, said there was a "co-ordinated policy failure across Europe".
"Underlying it, ignoring all the special factors, what we see is the economy is not delivering the sustainable growth that we would normally see at this point in the cycle," he told the BBC.
"This is due to the [UK] government's policies and the failure of governments in the eurozone.
"They should not have cut the deficit so quickly and before the recovery was sustained."