Q4 GDP revised down to 0.6 per cent

The Office for National Statistics said 0.5% of the fall was due to December’s bad weather but that today’s figures suggested the UK underlying economy shrank approximately 0.1% in Q4 2010.

Output of business services and finance industries decreased by 1.1% compared with a rise of 0.3 % in Q3 2010 while government and other services output decreased by 0.1% in Q4 2010 compared with an increase of 0.3 % in the previous quarter.

The volume of output in production industries rose by 0.7% within which manufacturing rose by 1.1%. Service industries’ output decreased by 0.7 % while construction output is estimated to have decreased by 2.5% compared with a rise of 3.8% in the previous quarter.

In real terms, household expenditure decreased by 0.1% compared with the previous quarter while gross fixed capital formation decreased by 2.5%.

The deficit in net trade increased to £10.2 billion in Q4 2010 from £9.3 billion in 2010 quarter three, as imports rose faster than exports.

Christina Weisz, director of forex broker Currency Solutions, said: "Both the ONS and Bank of England stand by the line that were it not for the severe winter weather, Q4 GDP would not have been negative. For this reason, the next round of GDP for Q1 of 2011 will be crucial, for both the timing of interest rate rises and the direction of Sterling."