Britain’s latest GDP numbers are a “stunningly bad outcome”, according to Howard Archer, the chief British and European economist at IHS Global Insight.
Archer says the performance is far worse than even the most pessimistic of forecasts, even when considering much slower economic activity in December owing to bad weather.
The weakness cannot be put down only to the weather, he adds. (article continues below)
Archer now expects the Bank of England to keep interest rates at 0.5% despite current elevated inflation levels.
According to Archer, the fact that GDP contracted in the fourth quarter, before the bulk of Britain’s fiscal tightening, raises serious concerns over the economy’s ability to grow significantly.
The economist says the concerns will be exacerbated in the face of upcoming spending cuts and tax hikes.