UK economy sees contraction at end of 2011

Invoice finance solutions could help struggling businesses improve cashflow

The UK economy shrunk by 0.2% in the last three months of 2011, the Office of National Statistics (ONS) confirmed yesterday, as the widely forecast contraction did indeed come to pass.

Most economists had forecast the economy to show a 0.1% fall in activity, so the new figure was slightly worse than expected.

Manufacturing and construction both saw falls in activity, of 0.9% and 0.5% respectively.

Growth in the UK’s biggest sector, Services, ground to a halt as public sector strikes in November were muted as one cause of the drop in activity.

Growth forecasts for 2012 were also cut on Tuesday by the International Monetary Fund (IMF) to 0.6%, down from a previous prediction of 1.6%.

SBF's Managing Director, Greg Bell, commented on the figures, "The squeeze on consumer spending has started to come through, prompting the newspapers to again begin talk of a double dip recession."

"The UK's biggest earners are also the biggest spenders and, without a prevailing feel-good factor, money will not be spent or change hands and consequently it won't produce the tax benefit to the Chancellor that would help lessen the deficit and promote economic growth."