Economists expect GDP slowdown

A SHADOW will be cast over Britain's economic recovery this week as GDP figures are tipped to show growth slowed in the fourth quarter to 0.4 per cent.

City economists expect the snow to have played a part in the lacklustre output, but recent surveys point to wider problems in the economy - in particular in the services sector.

Tuesday's figures will be the first estimate of fourth-quarter GDP growth, but economists are braced for a second, sizeable quarterly drop after growth slumped from 1.1 per cent in the second quarter to 0.7 per cent between July and September. But if estimates of 0.4 per cent fourth-quarter growth prove correct, output for the whole of 2010 will come in at 1.6 per cent - better than expected at the start of the year.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "While hardly a spectacular year of growth - especially after such a deep recession - it would nevertheless be a significantly better performance than had seemed likely at the start of 2010."

Any sign of a further easing in the rate of economic expansion will add to the pressure on the Bank of England's Monetary Policy Committee, which is in a quandary over how to balance weaker growth with spiralling inflation.