Hopeful signs as academics forecast growth

The UK economy rebounded strongly last month after its unexpected weather-related contraction in December, the National Institute of Economic and Social Research estimated yesterday.

The academic forecasting body calculated that GDP grew by 0.6 per cent on the month in January. Private-sector surveys have also pointed to a rapid rebound from the coldest December in 100 years.

The NIESR said: "Care should be taken when interpreting the figures since they are distorted by the impact of the adverse weather at the end of last year.

"The underlying level of GDP appears relatively flat over the last few months."

The forecasting organisation points out that its quarterly growth forecasts are usually within 0.2 percentage points of the Office for National Statistics' initial estimate.

However, the NIESR, like most other economic forecasters and analysts, failed to predict Britain's 2010 fourth-quarter economic contraction of 0.5 per cent.