Belfast Telegraph

Industry surge lifts gloom as economy slides

There was a glimmer of light for the UK recovery after revised figures showed the economy contracted by less than previously thought at the end of 2010.

The Office for National Statistics (ONS) said gross domestic product (GDP) fell 0.5% in the snow-hit final quarter of last year - an improvement on the 0.6% decline previously estimated.

The figure was revised partly as a result of greater investment from businesses, but economists said the figures still indicated a worrying loss of momentum at the end of 2010.

Yesterday's data showed business investment was flat in the quarter, against the 2.5% decline previously estimated.

Industrial production rose more than previously thought, as a recovering manufacturing sector continued to surge ahead. Services and construction both fell less than previously estimated.

The 0.5% reduction is still the biggest fall since the second quarter of 2009. The ONS said the reading would have been flat without December's adverse weather.

Export growth was also marked down from 2.3% to 1.7%, dealing a blow to the Government's efforts to re-balance the economy to be less reliant on imports.

The UK's current account deficit grew to £10.5bn in the quarter, its highest level for a year and a half, up from £8.7bn previously.

The Treasury said the figures proved the Government's plans were working and claimed that last week's Budget would help the economy grow.

A spokesman for the Treasury said: "This upward revision to growth continues to show the manufacturing sector performing well, which, supported by the actions announced in the Budget and the Plan for Growth, will help promote a re-balancing of the economy."

The figures are the third reading for the economy in the final quarter of 2010.