Wednesday, January 26, 2011
British Output downhill
The GDP of Britain faced a 0.5% decline in the 4th quarter of this year. Even though forecasters were not predicting drops in the British output, this drop in the 4th quarter is the last component of a 2% drop in the GDP the year of 2010. Construction is a very significant sector of the British economy and the harsh weather of the last quarter is said to have affected that sector significantly. The Business service and finance industries were also participants in the drop in output in this last quarter which reminds us of the intensity of the reliance of the British economy on these industries. The British economy could be about to face a slow year in 2011.
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Diego, this is a good article reflecting the volatility of Britain's GDP. There is no doubt that a good portion of this 2% drop in GDP can be attributed to a drop in service sector activity due to how reliant their economy is on the financial industry. On the other hand, manufacturing was up for the quarter so this played a role in dampening the effect of the drop in service sector activity. It will be interesting to see the effect that this has on the rest of Europe.
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