Published: 22 Dec 2010
Last Updated: 19 Aug 2013
OK, so the downgrade wasn't much - from 0.8% to 0.7%, which when you're dealing with a calculation of this size and complexity, is barely more than a rounding error. But it's the third time in a row that quarterly growth has been revised downwards, suggesting that people were right to be surprised about the apparent strength of the recovery (relatively speaking). What with the dismal news on unemployment and inflation, we're really ending 2010 with an economic whimper...
The headline downgrade wasn't the only bad news, either. Delve a little deeper, and it emerges that business and financial services both performed worse than originally thought, as did construction, services and production. More worryingly, imports actually grew faster than exports - which isn't exactly ideal, given that we're supposed to be exporting our way to recovery (with the help of a weak pound).
Of course, the snow isn't exactly helping matters at the moment. Estimates about the economic cost of the rotten weather vary, but some reckon it's in the region of £1.5bn - via lost sales, lost production, and travel disruption. BA alone is losing about £10m a day, according to some City analysts.
As such, it's a bit hard to see the growth figure perking up any time soon - particularly as the VAT hike, which kicks in next month, is likely to put the squeeze on retail sales. (Although if retailers end up with a load of excess stock after all this snow, will they end up offering discounts that will mask the rise?)
That said, it's almost Christmas, so let's look on the bright side. Current estimates suggest that the UK economy will grow by about 1.7% this year. That's not spectacular, but it's an awful lot better than most people were predicting this time last year; despite the recent slowdown, the UK economy has actually performed much better than expected. What's more, today's figures also showed that the savings ratio is on the rise. So it's not all doom and gloom...
The headline downgrade wasn't the only bad news, either. Delve a little deeper, and it emerges that business and financial services both performed worse than originally thought, as did construction, services and production. More worryingly, imports actually grew faster than exports - which isn't exactly ideal, given that we're supposed to be exporting our way to recovery (with the help of a weak pound).
Of course, the snow isn't exactly helping matters at the moment. Estimates about the economic cost of the rotten weather vary, but some reckon it's in the region of £1.5bn - via lost sales, lost production, and travel disruption. BA alone is losing about £10m a day, according to some City analysts.
As such, it's a bit hard to see the growth figure perking up any time soon - particularly as the VAT hike, which kicks in next month, is likely to put the squeeze on retail sales. (Although if retailers end up with a load of excess stock after all this snow, will they end up offering discounts that will mask the rise?)
That said, it's almost Christmas, so let's look on the bright side. Current estimates suggest that the UK economy will grow by about 1.7% this year. That's not spectacular, but it's an awful lot better than most people were predicting this time last year; despite the recent slowdown, the UK economy has actually performed much better than expected. What's more, today's figures also showed that the savings ratio is on the rise. So it's not all doom and gloom...
