MercoPress. South Atlantic News Agency

UK economy recovery in fourth quarter revised upwards

Consumers are still reluctant to spend and very much price conscious

The United Kingdom economy grew faster than previously thought in the last quarter of 2009, the Office for National Statistics says. It revised October to December's growth to 0.4%, up from the previous estimate of 0.3%.

The ONS said the revision was due to a combination of higher services, construction and agriculture output. The period saw the first quarter of growth since the first months of 2008. But GDP in the fourth quarter of 2009 was 3.1% lower than in the same quarter in 2008.

The ONS said output shrank by 4.9% during 2009 as a whole, the biggest fall since official records began.

Although this new figure will provide economists with some relief, it is the estimate for January to March's output that is most important.

The figure will be revealed on April 23 and could show a slip back into recession as the true the impact of January's snow and the return to VAT of 17.5% emerges.

A Treasury spokesman said: “While it is welcome to see an upward revision, recent data in the EU and elsewhere has highlighted that there are still risks and uncertainties to this recovery and there is no room for complacency.”

David Tinsley from the National Australia Bank said “it's undoubtedly good news but it's still really the case that the UK limped out of recession rather than made a solid rebound.

“One of the telling things of the data today is that real disposable income, that's really household spending power, fell in the final three months of last year, and that doesn't really bode well for spending this year.”

The amount being put aside by families fell from 8.4% to 7%.