GDP falls but manufacturing output up

The manufacturing sector continued to provide a bright spot in the UK economy as the latest figures from the Office of National Statistics recorded a fall of half a per cent in GDP in the last quarter of 2010.

The fall contrasts with an increase of 0.7 per cent in the previous quarter. The GDP estimate was affected by the bad weather in December and flat growth is widely regarded to be indicative of the real position of the economy.

That said, output in the manufacturing sector rose 1.4 per cent compared with an increase of 1.1 per cent in the previous quarter.

Commenting on the figures, EEF senior economist, Jeegar Kakkad, said: “While bad weather has had some impact the sharp fall in activity should serve as a stark warning that growth and the recovery cannot be taken for granted. Manufacturing remains the one bright spot on the landscape clouded with uncertainty but there are widespread challenges at home and abroad that could still dent growth this year.

“Although recoveries from financial crises are often rocky the unexpected decline in output will be of concern for policymakers and the pressure is now on government for a decisive outcome from its growth review.”