Economy suffers shock GDP decline
The UK's economic recovery has suffered a surprise setback as gross domestic product (GDP) fell by 0.5 per cent in the fourth quarter, sparking concern about a double-dip recession.
According to the Office for National Statistics (ONS), the unexpected drop between October and December was almost completely due to the severe winter weather. It came at the end of a year during which the UK had enjoyed economic growth, leaving total growth for 2010 at 1.4 per cent, well below experts' predictions.
The fall in GDP - the first since the third quarter of 2009 - was driven by a 0.5 per cent decline in the crucial services sector, which makes up more than 75 per cent of the total economy.
The figure, which is a preliminary estimate and subject to revision, is likely to shake confidence in the ability of the private sector to pick up the expected slack in the economy and hold off a double-dip recession.
However, Chancellor George Osborne remained defiant, saying: "These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by the terrible weather in December.
"There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis. We will not be blown off course by bad weather."
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