Sterling dives as UK economy posts shock Q4 contraction

UK GDP contracted by 0.5% in the last three months of 2010, shocking economists who had predicted growth of between 0.2% and 0.6% and sending sterling into freefall.

It was the first contraction in growth since the third quarter of 2009, according to the ONS, and comes as a blow to the UK's prospects for economic recovery. Business services and finance, construction and distribution, hotels and restaurants were the largest contributors to the negative growth. The ONS blames bad weather for the decline and says without it, growth would have been flat. "We should emphasise this assessment of the effect of the bad weather is the best we can make it at this stage, but is still inevitably uncertain," the report says. The economy grew by 0.7% in t...