The UK economy shrunk by 0.3% over the final quarter of the year, according to the latest numbers published by The Office for National Statistics (ONS). The following figures are worse than the 0.1% negative growth expected, further adding to fears that UK economy may re-enter recession in 2013.
Despite the GDP growth of 0.9% in the third quarter of the 2012, which was mainly due to the boost by the Olympics, the growth for the year as a whole was 0%. ONS reports that such downturn in GDP in the fourth quarter of the year is mainly as a result of fall in manufacturing output and a drop in mining and quarrying. This follows the postponement of the maintenance plans of the UK's largest North Sea oil field. The only sector seen growth was construction, which delivered a 0.3% rise in output.
The UK stock market struggled with such news, pushing sterling to its lowest level in more than a year against the euro, as it is now feared the UK might lose its AAA credit rating. According to George Osborne, the UK can’t ‘run away’ from problems facing the economy, as those are mainly caused by the debts built up over many years and problems abroad with the eurozone, where the UK exports most of its products." The UK housing market, therefore, might be negatively affected as a result of the slow economic recovery, causing more difficulties for first time buyers.