Another blow for the economy as GDP shrinks 0.3%

11 January: The Daily Telegraph reports that the National Institute of Economic and Social Research, which has earned a reputation for accuracy, has forecast that the economy contracted by 0.3% in the last quarter of 2012, meaning that over the year as a whole the economy was flat.

The figures will come as a blow to George Osborne, who has repeatedly claimed that his strategy is working and that there is no need for a “plan B”.

“It’s a disappointing set of data. We had thought that we might see a bounce back in manufacturing output over the month, but what we saw instead was a further contraction,” said Philip Shaw, an economist with Investec in London.

“Most of the official data are suggesting weakness over the fourth quarter.”

That would be further bad news for a government struggling to convince voters and economists that it can get the economy back on to a growth track while cutting public spending to reduce the budget deficit.


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Filed under Economy, George Osborne

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