SOURCE: City Index

City Index

January 25, 2013 05:45 ET

UK GDP Contracts Deeper Than Expected at -0.3% in Fourth Quarter -- City Index UK

LONDON--(Marketwire - Jan 25, 2013) - City Index UK: UK growth contracted deeper than expected in the fourth quarter by -0.3% when GDP had been expected to contract -0.1%. The figures showed that the UK failed to grow at all in 2012.

Read Full Article at cityindex.co.uk: UK GDP contracts deeper than expected at -0.3% in fourth quarter

This is a disappointing growth number and will naturally cause alarm bells to ring that the UK could enter a triple dip recession. For that to happen, Q1 2013 GDP must also see a contraction. It remains to be seen how much of the widespread snow and travel disruption may threaten the economy's ability to bounce back from this Q4 contraction but close attention will need to be paid to services and production data over the next month.

Despite the disappointment, there had been fears this could have been a much worse reading to the tune of a 0.5% contraction.

Breaking down the GDP numbers, one of the drags on the figures was output from North Sea, with a 10.2% decline in mining and quarrying output, which was the biggest decline since records began in 1997. This contributed to 0.18% of the 0.3% contraction whilst government services also contracted by 0.7%, the biggest fall since the second quarter of 2008.

Expected revisions

It must be said that there is historically some degree of volatility in the preliminary reading. Of the last twelve quarterly GDP readings, only once has the preliminary reading not been revised by the time each quarterly GDP has been confirmed. As such, we should take this number with a pinch of salt and expected revisions. Read more

About City Index:

City Index is one of the world leaders in spread betting and CFD trading. Established in the UK in 1983 we have grown to become leading providers of contracts for difference, Forex and spread betting over the past 29 years.

Read all the latest financial news from around the world and stay up-to-date with the latest economic events affecting the markets with City Index.

Your losses are magnified in exactly the same way as your gains if the market moves against you and can result in losses exceeding your initial outlay. Please ensure you fully understand the risks involved.