Tags: EU | Britain | Economy

U.K. Economy Expanded at Faster Rate Than Thought

Tuesday, 30 Mar 2010 07:27 AM

 

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Official data show that the British economy grew at a faster rate than previously estimated in the final quarter of last year when it exited recession.

Gross domestic product rose 0.4 percent in the last three months of 2009, improving on two earlier estimates of first 0.1 percent and then 0.3 percent growth, the Office for National Statistics reported Tuesday.

On a year-to-year basis, GDP contracted by 3.1 percent, less than the 3.3 percent previously reported.

The update is qualified good news for Prime Minister Gordon Brown's Labour government as it faces an uphill battle to win a national election expected on May 6.

Treasury chief Alistair Darling claimed the figures as a vindication of the government's decision to cut value-added tax, the broad-based sales tax, from 17.5 percent to 15 percent for a year. That reduction expired on Jan. 1.

Part of the fourth quarter growth, Darling told a Parliamentary committee, "was due to the fact that expenditure was brought forward into 2009 which is what I wanted to do."

The statistics office said the upward revision was due to higher output from services, construction and agriculture.

However, the peak to trough fall in output during the recession remained at 6.2 percent, the biggest since comparable records began, and economists said that the outlook for growth this year remained bumpy.

"The big picture of a fragile and unbalanced recovery is unchanged," said Jonathan Loynes, an economist at Capital Economics.

Loynes said that fourth quarter growth was still heavily reliant on public spending and inventories, both areas which are likely to be weaker in coming quarters.

Hetal Mehta, senior economic advisor to the Ernst & Young Item Club economic consultancy, said that growth in 2010 "will be sluggish and bumpy," retaining a forecast of 1 percent growth.

Like most other economists, Mehta's forecast is at the lower end of the 1-1.5 percent growth forecast by Darling.

The rise in GDP in the last quarter of 2009 officially ended an 18-month downturn in Britain, the country's worst recession since World War II.

Tuesday's figure was the third and final revision from the statistics office, which provides the reports over three months, updating its findings as more data is collated.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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