It turns out that the economy grew by even less than thought last year. The ONS left growth for the final quarter of 2011 unrevised at -0.2 per cent but downgraded Q3 growth to 0.5 per cent (down from 0.6 per cent) and Q1 growth to 0.3 per cent (down from 0.4 per cent).These revisions mean that total growth for 2011 was just 0.8 per cent, compared with 2.1 per cent in 2010, one of the worst performances in the EU.
If there is an upside for George Osborne, it is that the unrevised Q4 figure increases the chances of a bounce back in this quarter. This would allow the Chancellor to avoid a double-dip recession – defined as two consecutive quarters of negative growth. Indeed, all the recent data, such as the unexpectedly strong retail sales figures, suggests that the economy is experiencing a modest recovery. Mervyn King’s prediction of a “zig-zag” this year, with the economy alternating between positive and negative growth, looks likely to be borne out.
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