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Britain emerges from recession

LONDON, Mar 30 – Britain escaped from a record recession in better shape than previously thought in the fourth quarter of 2009, revised data showed Tuesday, but analysts agreed that the outlook remained weak.

Gross domestic product — the value of all the goods and services produced in the economy — grew by 0.4 percent in the three months to the end of December, the Office for National Statistics (ONS) said in a statement.

The third and final estimate was stronger than the previous reading of 0.3-percent expansion. Market expectations had been for no change in the figure.

The upward revision, driven by improved readings in the services, construction and agricultural sectors, comes after the ONS had already upgraded the data last month.

"The further upward revision to the fourth quarter … suggests that the economy exited recession with a bit more momentum than previously thought at the end of last year," said Capital Economics analyst Jonathan Loynes.

"While (the) figures perhaps provide a fractionally stronger platform for growth in 2010, the outlook remains fundamentally weak."

News of upwardly-revised growth comes with just weeks before Prime Minister Gordon Brown is expected to face a general election on May 6.

"To hear that Britain emerged from its worst post-war recession stronger than expected is clearly good news for future growth," added City Index analyst Nick Serff.

"However, there remains a lot of uncertainty as to whether this momentum can carry."

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And the ONS added Tuesday that the economy shrank by a record 4.9 percent last year, which was a slight improvement on the prior estimate for a contraction of 5.0 percent.

However, the last three months of 2009 marked the end of a deep recession following six successive quarters of contraction.

"The latest estimate of GDP … was higher than expectations and means the longest, deepest recession since official records began has ended," said economist Charles Davis at the Centre for Economics and Business Research.

"However, there are still concerns on the sustainability of the recovery as growth was largely driven by consumer and government spending — factors that are likely to wear off through 2010."

British GDP meanwhile shrank 3.1 percent in the fourth quarter, compared with the October-December period in 2008. That compared with the previous reading of a 3.3-percent contraction.

Finance minister Alistair Darling forecast last week in a pre-election budget statement that the economy would grow by a weaker-than-expected 3.0-3.5 percent in 2011.

Britain\’s Labour government vowed last Wednesday to hike taxes on the rich to help the poor hit by the global downturn and cut borrowing targets in a budget unveiled weeks before a knife-edge election.
 

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