The UK economy contracted in Q4. Yes we know that, but it has contacted more than we thought. It contracted 0.6% compared to previous quarter, revised down from 0.5% contraction. The fourth quarter GDP was 1.5% higher than a year ago, also being revised downward from 1.7%.
Source: Office for National Statistics
I think we should now realise how the situation is like in the United Kingdom. Inflation has hit 4% in January 2011, double of the Bank of England’s target. The Bank expects 4-5% inflation in the foreseeable future, and we have got one more member of the Monetary Policy Committee of the Bank who voted for a rate hike in the February meeting. At the same time, unemployment rose to 7.9%, and the government will be cutting spending and raising taxes (they have already raised VAT, of course). Things are certainly not looking good.
The Financial Times has come up with an interactive “Timetable for austerity Britain“.
This article originally appeared here: United Kingdom: Q4 GDP revised down, from bad to worse
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