The UK economy has suffered a bigger fall than expected, having shrunk by 1.6 per cent in the final quarter of 2008, according to a report on Sky News. The figure represents the worst fall in output since April-June 1980, almost 30 years ago.
The bigger-than-estimated fall in construction and house-building, as well as declining output from the UK?s services sector, are the main factors behind the huge slump. In 2008, construction fell by 4.9 per cent, which is the worst fall since 1980 and sharply lower than the 1.1 per cent the Office for National Statistics (ONS) predicted.
Even more bad news as consumer spending fell by 1 per cent over the quarter which is again the biggest drop since 1980. There is good news, as there was a huge increase in saving, which raised to 4.8 per cent during the final three months of 2008, almost three times the number in the previous quarter.
GDP growth was stable at 0.7 per cent over 2008, but the newly-revised fourth-quarter figures left GDP 2 per cent down year on year and worse there were predictions for a 4 per cent decline over 2009.
Capital Economics? Jonathan Loynes said: ?The rise in the saving ratio from 1.7 per cent to 4.8 per cent suggests that the required adjustment in households’ balance sheets is at least under way.
?But these processes have much further to go and the early signals point to a fall in GDP of a similar magnitude in the first quarter of 2009, putting the economy on track to contract by as much as 4 per cent this year.?
