GDP Growth Revised Upwards

(Telegraph) – GORDON BROWN’S ELECTION PROSPECTS have been boosted after official figures showed that Britain’s economy expanded by more than expected in the final quarter of 2009.

The Office for National Statistics said that the UK’s gross domestic product – the broadest measure of overall economic performance – increased by 0.3pc in the final three months of 2009, rather than the 0.1pc expansion it had previously estimated. The revision was higher than most economists had expected, and supports suspicions in the City that the economy is in fact starting to bounce back from its deepest recession in living memory.

The expansion is nevertheless slightly lower than economists had anticipated before last month’s release of the first estimate for growth, which sparked fears that Britain could be subject to a double-dip back into recession this year. It will also spark suspicions in Whitehall that the Prime Minister may call a snap election on the back of the news – though most think the polls will be in May.

The ONS said the revision was largely due to a stronger performance from the services sector, which accounts for 75pc of UK economic output. It said the UK recorded the strongest growth in services output and household expenditure since the first quarter of 2008 – in other words since the recession began. It was also supported by a smaller-than-previously-thought decline in inventories, as companies slowed the rate at which they have been feeding off stockpiles.

The ONS added that the revision was largely due to a strong December performance – the figures for which were not available at the time of the first estimate of growth last month.

“Overall, the upward revision is welcome,” said Jonathan Loynes of Capital Economics. “But does not alter the picture of a very fragile recovery.”