U.K. Economic Slump May Be Deeper as Construction Revised

By Scott Hamilton - Fri May 11 10:45:02 GMT 2012

A pedestrian passes the Bank of England.

A pedestrian passes the Bank of England. Photographer: Simon Dawson/Bloomberg

May 10 (Bloomberg) -- David Blanchflower, a professor at Dartmouth College and a Bloomberg Television contributing editor, talks about the Bank of England's stimulus program and U.K. inflation. He speaks with Manus Cranny on Bloomberg Television's "Last Word." (Source: Bloomberg)

Britains economy may have shrunk more than previously estimated in the first quarter after the statistics office reported a deeper slump in construction.

Building output plunged 4.8 percent in the three months through March, the Office for National Statistics said today. That compares with a 3 percent drop in the first estimate of gross domestic product on April 25, which showed the economy contracted 0.2 percent. The revision on its own would shave 0.1 percentage point off GDP, the statistics office said.

The building data may add to concerns about the economy as the Bank of England grapples with a double-dip recession and inflation remains above its target. Policy makers hadnt seen the revision before they decided yesterday to halt their quantitative-easing program at 325 billion pounds ($524 billion), according to statistics office officials.

Todays figures will intensify the dilemma facing the Monetary Policy Committee, said Samuel Tombs, an economist at Capital Economics Ltd. in London. Policy makers have to balance sticky inflation and very weak economic activity, he said.

The pound remained weaker against the dollar and the euro after the data was published. It traded at $1.6103 as of 11:30 a.m., down 0.3 percent on the day.

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U.K. Economic Slump May Be Deeper as Construction Revised