Move out of recession speedier than expected

The UK moved faster out of recession than was first thought in the final three months of 2009, official figures showed yesterday.

The economy grew by 0.4 per cent between October and December – more strongly than the 0.3 per cent advance previously estimated by the Office for National Statistics.

The office said output shrank by 4.9 per cent during 2009 as a whole – less than the five per cent first feared but still the biggest fall since official records began.

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While yesterday's upward revision gave some comfort, the real focus will be on the first official estimate for output between January and March.

This will arrive on April 23 – deep into a likely General Election campaign – and could show a slide back into recession after the impact of January's snow on sectors such as retail, as well as the return of VAT to 17.5 per cent.

The figures published yesterday showed a slightly shallower 0.9 per cent fall in construction output during the final three months of last year, while business investment has also fallen by less than expected but the proportion of income put aside by families shrank to seven per cent from 8.4 per cent – its first quarter-on-quarter fall since July-September 2008 – which may reflect households bringing forward spending to beat VAT rises.

However, ING economist Mark Cliffe said the fall in savings was a "sign of things to come", and claimed the average household has accessible savings of only 2,200, according to the bank's research.