UK DATA: Q4 Preliminary GDP -0.2% q/q; +0.8% y/y
–Below median of -0.1% q/q; +0.8% y/y
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Economic output fell by more than expected in Q4 increasing the
likelihood that the UK will fall back into recession. The data, along
with dovish comments from Bank of England Governor King yesterday, are
likely to fuel speculation that the central bank could do further
Quantitative Easing at the February Monetary Policy Committee meeting.
GDP fell 0.2% on the quarter in Q4 and was up 0.8% on the year. Analysts
had expected a smaller drop of 0.1% on the quarter and increase of 0.8%
on the year. The disappointing outturn is also below the November BOE
forecast which was for GDP to remain unchanged on the quarter. Services
output, which makes up 76% of GDP, was flat on the quarter, following a
rise of 0.7% in Q3. Production was down 1.2%, construction down 0.5% and
agriculture up 0.1%.