Marginally Better

GDP growth contracted 0.5 per cent in the fourth quarter of 2010, revised from the 0.6 per cent decline previously published by the Office for National Statistics (ONS).

GDP at the end of last year is now 1.5 per cent higher than in the fourth quarter of 2009. The ONS also altered business investment figures for the last three months of 2010 to show no growth when compared to the previous quarter. However, business investment was 12.2 per cent higher than the same period in 2009.

David Kern, chief economist at the British Chambers of Commerce, acknowledges that the figures for GDP growth are ‘marginally better’ than the previous estimate but says they do not alter the ‘broad picture’. While output among the production industries has been revised up to 0.8 per cent in the latest quarter, with output in the manufacturing sector rising 1.1 per cent, output in the service industries fell by 0.6 per cent.

Gareth Osborne, Director General of APA said: ‘We are encouraged to see a smaller decline in services than was expected, but the sector’s performance is still disappointing. ‘The UK economy is clearly still facing many challenges in the months ahead. The most significant impact comes from the stalled property market and we believe it will be another five years before we see a real upturn in that area.’

APA agrees with BCC’s call to the Bank of England’s Monetary Policy Committee to not increase interest rates ‘prematurely’ in order to avoid the risk of an ‘economic setback’.

APA