Henderson's chief economist Simon Ward argues there is no need to adopt a more pessimistic prediction for UK GDP growth this year, despite a worse than expected fourth quarter figure.
Some economists have revised down their 2011 GDP growth forecast in the light of the 0.6% fourth-quarter fall. This is questionable. To the extent last quarter's decline was due to December's bad weather, the effect will be to shift production from 2010 to 2011, resulting in faster growth this year. The Office for National Statistics estimates the weather effect reduced GDP by 0.5% in the fourth quarter. This implies a negative impact of 0.125% for the year as a whole. Assume two-thirds of the production shortfall is recouped in 2011, with the remaining third representing a permanent ...
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