The UK government received some welcome news amid the current economic troubles facing the country recently as an Office for National Statistics (ONS) report revealed that revisions to fourth quarter GDP figures resulted in 0.4 percent growth, much faster than the previously forecast 0.1 percent expansion.
The initial estimate was enough to take the UK out of what is officially defined as a recession period, but the overall size of growth during that time gained from a 5 percent drop to 5.5 percent, mainly because the economy was slightly smaller than originally thought going into the quarter, hence the revision upwards.
Before the final quarter of the year, Britain had suffered seven consecutive quarters of economic contraction, its worst run of form on record.
As such, a rise in the services industry by 0.4 percent was a very welcome tonic for the country’s policymakers. That’s a recovery from a 0.2 percent drop in the third quarter.
Manufacturing jumped 0.6 percent in response to a 1.5 percent drop the previous quarter, while private spending rose 0.5 percent.
Many analysts are warning that the mini-recovery will not save the country from sinking back into recession this year if the current stagnant economic climate persists.
“We need to really dig in for a turbulent 3-month period ahead, and I definitely wouldn’t say we are clear into a full blown recovery as yet,” said Lloyds TSB lead strategist Adam Chester.
“Torrid weather and an all round bad January has investors spooked again and general sentiment says the economy is still in danger of sinking back down into the red again,” he added.
Beijing-based investment firm Clarus China Everbright, a prominent Chinese investor into the UK, says they are sticking with the same investment plan despite news of the upward revisions to the British economy by the ONS, as they also cited concerns over a weak first quarter to the year.
Growth may have been hobbled by the decision by the Bank of England to halt their monetary stimulus program and the governments return to 17.5 percent VAT in the New Year. A host of government initiatives, such as the car scrapping scheme, are also due to conclude soon, which may affect output in the manufacturing industry.
Britain has followed Germany and France out of recession, but experts are concerned that it took so long to get back on its feet when others were heading back into the black 12-months ago.
