UK economy shrinks by 0.3%

Figures released today by the Office for National Statistics demonstrate that the economy has shrunk by 0.3% in the last three months of 2012.

The figures showed a decrease in production in the fourth quarter of 2012, with the biggest decline in mining and quarrying of 0.7%. 

The hotel, restaurant and retail industry also saw a decrease of 0.4% in the latest figures, due to the Olympics and Paralympic games taking place between July and September, leading to a fall at the end of 2012.

There was also a small increase of 0.3% in construction output in the final quarter of the year, though the sector had seen a decline of 11% since the fourth quarter of 2011.

The Office for Budget Responsibility, the government’s independent financial watchdog, forecasts growth for the UK in 2013 to be 1.2%, with the International Monetary Fund (IMF) predicting the economy will grow by 1%. 

George Osborne said that he would not “run away” from the problems facing the UK economy: “We have a reminder today that Britain faces a very difficult economic situation. A reminder that last year was particularly difficult, that we face problems at home because of the debts built up over many years and problems abroad with the Eurozone, where we export most of our products, in recession.”

“Now, we can either run away from those problems or we can confront them and I am determined to confront them so that we can go on creating jobs for the people of this country.”

CBI Director-General, John Cridland, said: “We think growth will continue to be fairly flat through the winter but momentum will gradually build later in the year, as the global economy picks up a little and confidence lifts.”

Daniel Cotter