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Wednesday, 25 January 2012

GDP falls in Q4 by 0.2%

It wasn't a huge surprise, but GDP fell by 0.2% in the last quarter of the year.  However, analysts expected a fall of just 0.1% so it does increase the likelihood of the UK falling into a recession, defined as 2 quarters of negative growth.  This will put pressure on the Bank of England to increase the measures to stimulate the economy known as quantative easing.  The coalition will also be facing pressure to find ways to stimulate growth.

Experian also announced that the number of corporate insolvencies rose in 2011 when compared to 2010. Experian said there were 21,070 corporate insolvencies in the U.K. in 2011, up from 19,818 in 2010. The proportion of the total business population failing (the insolvency rate) rose slightly up to 1.1% from 1.03%, Experian said.  This does need to be taken in context as an insolvency rate of just over 1% is historically very low compared to the nearer 2.5% in the early 90s.

Prior to Q4 insolvencies were actually down but it does go to show what an impact the Euro crisis has had on sentiment and consumer confidence.  The austerity programme as well is beginning to be felt.

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