The U.K. economy shrank more than previously thought in the fourth quarter of 2011 due to a sharper-than-expected decline in the financial services sector, official data showed Wednesday.
In its third and final estimate, the Office for National Statistics said gross domestic product contracted 0.3% between October and December after growing 0.6% in the third quarter. The annual growth rate for 2011 was 0.7%.
An ONS official said the downward revision was driven by a decline in output from the dominant services sector, in particular financial and insurance services. Services output was revised down to show a contraction of 0.1% from a previous flat reading.
The overall contraction in the fourth quarter was caused by falling output in the production, manufacturing and construction sectors.
The ONS said there are signs, however, that consumers are beginning to feel more confident about spending with household consumption rising 0.4%--the first quarterly increase in consumption in six quarters, but the household saving ratio dropped to 7.7% in the fourth quarter from 7.9% in the previous quarter, suggesting consumers may have been dipping into their savings to spend.
Business investment fell in the fourth quarter by an upwardly revised GBP1 billion, or 3.3%, to GBP29.7 billion compared with the previous quarter.
Other data released Wednesday showed the current account deficit shrank to GBP8.5 billion in the fourth quarter, from an upwardly revised deficit of GBP10.5 billion in the third quarter.
The current account, or the balance of trade, is the difference between the U.K.'s exports of goods and services and its imports of goods and services.
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