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UK contracts the most in Q4
By Jennifer Ryan |
February 26, 2009, Thursday
|
Print Edition
Print Edition
THE United Kingdom economy contracted the most since 1980 in the fourth quarter as the financial crisis prompted spending by consumers and companies to shrivel.
Gross domestic product fell 1.5 percent from the third quarter, matching the previous estimate, the Office for National Statistics said yesterday in London. Consumer spending declined 0.7 percent on the quarter, the most since 1991, while fixed investment dropped 2.3 percent.
The British economy needs additional stimulus to stem the recession and head off the risk of deflation, Bank of England policy maker Andrew Sentance said on Tuesday. Prime Minister Gordon Brown's government may announce further measures this week to support banks including Royal Bank of Scotland Group Plc as the financial crisis persists.
"The UK economy is certainly in a recession if not a mini depression," Neil Mackinnon, chief economist at ECU Plc in London, said in a Bloomberg Television interview. "Things are likely to get worse before they get better."
The central bank will take its next decision on March 5. Policy makers have already cut the benchmark interest rate to 1 percent, a record low, and have signaled they want the power to create money to help stimulate the economy.
The drop in gross domestic product was less than the 1.6 percent median forecast of 26 economists in a Bloomberg News survey. On the year, GDP fell 1.9 percent, exceeding the median prediction of 1.8 percent.
Retailers such as Stylo Plc, JJB Sports Plc, Woolworths Group Plc, Zavvi Group and Adams Childrenswear Ltd are among the UK business that have collapsed in the past six months as consumers cut spending.
Barratt Developments Plc, the UK's second-biggest home builder by volume, yesterday wrote down the value of land holdings and unfinished stock by 495 million pounds (US$719.4 million) amid Britain's biggest housing slump in 30 years.
Yesterday's report showed that industrial production dropped 4.5 percent in the quarter, compared with a previous estimate of 3.9 percent. Manufacturing fell 5.1 percent, down from an estimate of 4.6 percent, the statistics office said.
Gross domestic product fell 1.5 percent from the third quarter, matching the previous estimate, the Office for National Statistics said yesterday in London. Consumer spending declined 0.7 percent on the quarter, the most since 1991, while fixed investment dropped 2.3 percent.
The British economy needs additional stimulus to stem the recession and head off the risk of deflation, Bank of England policy maker Andrew Sentance said on Tuesday. Prime Minister Gordon Brown's government may announce further measures this week to support banks including Royal Bank of Scotland Group Plc as the financial crisis persists.
"The UK economy is certainly in a recession if not a mini depression," Neil Mackinnon, chief economist at ECU Plc in London, said in a Bloomberg Television interview. "Things are likely to get worse before they get better."
The central bank will take its next decision on March 5. Policy makers have already cut the benchmark interest rate to 1 percent, a record low, and have signaled they want the power to create money to help stimulate the economy.
The drop in gross domestic product was less than the 1.6 percent median forecast of 26 economists in a Bloomberg News survey. On the year, GDP fell 1.9 percent, exceeding the median prediction of 1.8 percent.
Retailers such as Stylo Plc, JJB Sports Plc, Woolworths Group Plc, Zavvi Group and Adams Childrenswear Ltd are among the UK business that have collapsed in the past six months as consumers cut spending.
Barratt Developments Plc, the UK's second-biggest home builder by volume, yesterday wrote down the value of land holdings and unfinished stock by 495 million pounds (US$719.4 million) amid Britain's biggest housing slump in 30 years.
Yesterday's report showed that industrial production dropped 4.5 percent in the quarter, compared with a previous estimate of 3.9 percent. Manufacturing fell 5.1 percent, down from an estimate of 4.6 percent, the statistics office said.
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