U.K. GDP Revised Up to Show 0.2% Drop

The U.K. economy shrank less than previously estimated in the third quarter as a jump in construction and fixed investment brought the longest recession on record closer to ending.

Gross domestic product fell 0.2 percent from the second quarter, compared with a previous measurement of a 0.3 percent drop, the Office for National Statistics said.

The Confederation of British Industry yesterday raised its 2010 economic growth forecast and said the Bank of England may pause its bond-purchase plan in February. Policy makers have pledged to print 200 billion pounds of new money to stoke spending and shake off Britain’s longest recession on record.

The recession has now shaved 6 percent off gross domestic product, the statistics office said. The economy contracted 5.1 percent from a year earlier.

Construction jumped 1.9 percent, compared with a previous estimate of a 1.1 percent drop, the statistics office said. That offset bigger contractions in services and industrial production.

Fixed investment increased 2.2 percent, instead of the 0.3 percent drop previously measured. Government spending rose 0.3 percent and consumer spending increased 0.1 percent.

The household savings ratio, which measures the proportion of income hoarded by consumers, rose to 8.6 percent in the third quarter, the most since the first quarter of 1998.

The central bank kept its bond purchase plan unchanged and held the benchmark interest rate at a record low of 0.5 percent.

The current account gap widened to 4.7 billion pounds in the third quarter, or 1.3 percent of GDP, from 4.4 billion pounds in the previous three months.

U.K. GDP Revised Up to Show 0.2% Drop

TradingEconomics.com, Bloomberg
12/22/2009 10:05:24 AM