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UK GDP grew just 0.2pc over 2012

Wednesday, February 27 16:21:59

Britain's dire economic performance at the end of last year was confirmed today as official figures revealed household spending grew at the slowest rate in a year.

The Office for National Statistics (ONS) said spending on goods and services rose 0.2pc between October and December.

This was the lowest reading since the fourth quarter of 2011 - after slow growth in wages hit consumers.

But there was a chink of light in the economic gloom as the ONS said the economy expanded as a whole in 2012, up 0.2pc against a previous estimate for zero growth.

The upward revision came after the ONS raised its estimate for third quarter growth from 0.9pc to 1pc, although it continued to believe the economy contracted by 0.3pc in the final quarter of the year.

It will offer little respite for Chancellor George Osborne ahead of next month's Budget, coming just days after the UK was stripped of its prized AAA rating by Moody's.

Chris Williamson, chief economist at Markit, said recent industry surveys suggested the UK economy would "narrowly" avoid a triple-dip recession with 0.2pc growth in the first quarter.

"However, none of the root causes of the weakness of the economy have yet been resolved, suggesting very modest growth at best can be expected over the course of 2013," he said.

A marked slowdown in wages growth was behind the drop in household spending in the last quarter, with employee compensation rising by just 0.1pc against 0.5pc growth in the third quarter.

Business investment fell by 1.2pc in another sign of weak demand, while exports fell 1.5pc and imports dropped 1.2pc. Reuters