Britain came out of recession in the fourth quarter of 2009, but only just and with a far weaker growth rate than expected, data showed today, suggesting any monetary tightening remains a long way off.
The Office for National Statistics said gross domestic product rose by 0.1 per cent between October and December, well below analysts' forecasts for growth of 0.4 per cent after an 18-month recession which wiped out 6.0 per cent of output.
Output was still 3.2 per cent lower on the same period a year ago and overall GDP fell by a record 4.8 per cent in 2009.
Bank of England policy makers will study the data as they assess the strength of the recovery and decide next week whether to halt bond purchases and prepare to withdraw emergency stimulus measures.
"It's clearly disappointing," Simon Hayes, chief UK economist at Barclays Capital and a former Bank of England official, said in a telephone interview. "The recovery is going to be uneven. I think the Bank of England will halt quantitative easing in February, but if we don't see sustained growth it's likely we may see them extend it in the middle of the year."
The pound fell as much as 0.4 per cent after the release and traded at $1.6147 as of 9.44am in London. The yield on the two-year government bond was down 1 basis point at 1.202 per cent.
While news that Britain is finally out of recession may boost consumer confidence, the sluggish recovery is still likely to weigh on Labour prime minister Gordon Brown's chances of winning a parliamentary election expected in 100 days.
While Mr Brown has regularly argued that his decisions have helped Britain weather the global storm, the UK is the last of the major economies to exit the downturn.
Agencies