Britain's economy contracted even faster than previously thought in the last three months of 2010, shrinking by 0.6%, after downward revisions to industrial and services output, official data showed today.
The figures may make Bank of England policymakers think twice about raising interest rates, although there have been signs that activity picked up at the start of this year followi ng December's snow-related disruption.
Analysts had expected an unchanged reading of a contraction of 0.5%.
The Office for National Statistics said the downgrade was mainly due to lower production and services output than it estimated last month. It stuck to its estimate that severe weather in December accounted for 0.5 percentage points of the decline.
The figures highlight the dilemma facing the Bank of England which needs to steer inflation back to target but is reluctant to raise interest rates when a sustained recovery is far from assured.
A breakdown of the figures showed household spending fell 0.1%, the first fall in 18 months. The fall shows households were tightening their belts even before the rise in VAT sales tax at the start of this year, and an intensification of the government's spending squeeze.
Output in the services sector was revised down to show a fall of 0.7% from 0.5% previously. Industrial output was revised down to show a rise of 0.7% compared with 0.9% in an earlier estimate.
UK consumer confidence edges up
British consumer confidence edged higher this month from January's 22-month low after a slight recovery in shoppers' personal financial situation and willingness to make big purchases, a survey shows today.
The GfK NOP consumer confidence index rose to -28 from January's -29, but is well below the level of -14 this time last year as shoppers face rising prices and sluggish wage growth, while public-sector spending cuts put jobs at risk.
'While the UK government will be relieved that consumer confidence has levelled out, such a small increase indicates that last month's astonishing figures were not an aberration,' said Nick Moon, managing director of GfK NOP Social Research.
The CBI business lobby yesterday reported a widening gap in morale between firms reliant on consumer spending and those that benefit from business investment, and its retail sales index fell to an eight month low.
GfK NOP polled 2,000 people in Britain between February 4 and February 13 in the survey, which was carried out on behalf of the European Commission.
