GDP expected to have slowed in 2010
Preliminary GDP figures for final quarter out at 9.30am
Business secretary Vince Cable expects a 'pretty bad quarter'
Forecasts range from 0.1% to 0.7%
Concerns that Britain's economic recovery is running out of steam are likely to intensify today when the first estimate of GDP for the last three months of 2010 is published.
The preliminary estimate for GDP in the final quarter of 2010, scheduled for release at 9.30am, is expected to show that growth was slower than earlier in the year. Economists fear that the construction industry and the service sector have both slowed since October.
The icy weather that hit Britain in December also stunted growth at the end of the quarter, although City experts disagree about how much economic activity was lost. Estimates for GDP growth in the quarter vary from as low as 0.1% to as high as 0.7%, quarter on quarter. Anything below the top of this range would equate to slower growth than was recorded in the third quarter of 2010.
The coalition government appears to be braced for a poor GDP reading. Business secretary Vince Cable told the Today Programme this morning that "there is a resonable consensus that this was a pretty bad quarter, mainly because of the weather."
A disappointing GDP reading will be seized on by opposition politicians as evidence that public spending is being cut too quickly. Ed Balls, the new shadow chancellor, claimed yesterday that George Osborne's deficit-reduction plan was a "reckless gamble".
Balls said: "The Tory-led government has deliberately and needlessly taken Britain down a different path with cuts that go too far and too fast, and tax rises which directly hit family budgets."
Sir Richard Lambert, the outgoing head of the CBI, also criticised the coalition government's performance. He accused it of a lack of vision, and of t! aking "a series of policy initiatives for political reasons, apparently careless of the damage that they might do to business and to job creation".
Cable insisted last night that a long-term growth strategy exists. But further questions have been raised over the strength of the recovery by the International Labour Organisation, which said last night that western governments are failing to stimulate growth and employment.
A stronger GDP figure would be welcome news for both Osborne and Mervyn King at the Bank of England. Joshua Raymond, trader at City Index, predicted that growth of more than 0.5% would calm fears of a double-dip recession, and give the Bank of England more freedom to raise interest rates.
On an year-on-year basis, economists believe that today's figures will show that annual GDP growth slipped back to 2.6% in the last quarter, from 2.7%.
Back in the second quarter of 2010, the British economy grew at an unusually rapid 1.1% as the country emerged from recession and benefited from the stimulus measures introduced by the previous government. The 0.7% growth seen in the third quarter was significantly stronger than City estimates.
Economic data released this month showed that the services sector the dominant part of the UK economy suffered a sharp drop in activity in December, when snow and ice prevented many people from reaching their offices or the high street. The construction industry also experienc! ed a slo wdown, due to public sector cutbacks and the weather.
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