GDP contraction is 'shocking'

Date: 26th January 2011

Small business owners operating in the UK could be among those interested in the recent comments of one expert following the "shocking" contraction of the country's GDP.

Recently-published official figures revealed that GDP contracted by 0.5 per cent in the final quarter.

According to the Office for National Statistics' report, year-on-year growth was calculated at 1.7 per cent - less than the 2.6 per cent that had been predicted.

Mark Bolsom, head of the UK trading desk at Travelex Global Business Payments, commented: "We knew that snow had seriously impacted retail sales in December but this will come as a massive shock; nobody expected contraction.

"It's a real disaster, given that January's VAT hike will drain even more money out of the system. And whilst there had been talk of an interest rate hike, this is surely now off the agenda. Economic contraction is a really bad way to go into a period of heavy fiscal tightening and is not what the government would have wanted at all."

Posted by Jacob Williams