Thursday, January 26, 2012

UK economy shrinks by 0.2 pct in 4th quarter (AP)

LONDON ? Britain's economy shrank by 0.2 percent in the last three months of 2011, official data showed Wednesday, a worse than expected result that raises fears of a recession and could see the Bank of England push for more monetary stimulus.

The market consensus had been that the economy would contract by only 0.1 percent in the quarter. For the year, GDP grew by just 0.8 percent, the Office for National Statistics said.

The fourth-quarter drop is likely to confirm analysts' belief that the Bank of England will authorize spending more billions next month to stimulate the economy.

Minutes of the January meeting of the Bank's Monetary Policy Committee showed that, as expected, the nine members had been unanimous in voting not to approve more stimulus.

The Bank had indicated that it would take at least through January to spend the 75 billion pounds in asset purchases approved in October.

Some analysts expect the bank to authorize more purchases next month.

The GDP report showed that Britain's big services sector didn't grow at all in the fourth quarter, while output of production industries, including factories, fell by 1.2 percent.

The International Monetary Fund this week cut its forecasts for the U.K. economy, predicting growth of only 0.6 percent compared with 1.6 percent previously.

Source: http://us.rd.yahoo.com/dailynews/rss/europe/*http%3A//news.yahoo.com/s/ap/20120125/ap_on_bi_ge/eu_britain_economy

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