GDP drops in the last quarter of 2010
GDP fell by 0.5 per cent in the last quarter of 2010, according to reports from the Office for National Statistics (ONS).
GDP dropped by 0.5 per cent in Q4 of 2010
The 0.5 per cent decrease, the biggest drop in more than a year, is largely down to the widely reported slump in retail sales during December’s Arctic weather conditions and a shock 3.3 per cent drop in construction output, the ONS reports.
The contraction in GDP follows growth of 0.7 per cent in Q3 and 1.1 per cent in Q2, and flies in the face of economists’ forecasts of between 0.2 and 0.6 per cent growth for the last quarter of 2010.
But while many are dubbing the drop in GDP a “shock”, others were anticipating the bad news – and remain cautious about chances of recovery in 2011. As Thomas Coles, managing director of MSM Software, says: “The contraction in the economy is no great surprise. Many small businesses have experienced a turbulent second half in 2010 and in my experience, are hugely pessimistic for 2011.”
The figures will fuel fears over a double-dip recession and heap pressure on the Coalition government to reconsider the severity of its austerity drive, though Chancellor George Osborne has stated there is “no question” of changing the fiscal plan.
The plan in question was criticised by outgoing director-general of the CBI Richard Lambert yesterday, when he slammed the Coalition’s "lack of vision" for economic growth, saying the government’s politics-over-economics plans were “damaging to growth”.
So, amid impending fuel rises, a predicted increase in insolvencies, and steadily rising prices, what should the government do to foster growth?
“The government needs to instil less regulation and lower business taxes to stimulate rather than constrain growth,” says MSM’s Coles.
Picture: source