The Chancellor, Alistair Darling, has blamed the crisis in the eurozone and lack of effort by British exporters for the sluggish performance of the economy.
Although the Office for National Statistics narrowly upgraded GDP growth in the last quarter of last year from 0.3 per cent to 0.4 per cent, in line with expectations, economists are more concerned about prospects for the first quarter of this year. These will be released on 23 April.
Howard Archer, the chief economist at Global Insight, said: "Looking through the weather-related distortions to activity in the first few months of 2010, it looks like gradual recovery remains intact. But gradual is the key word."
Expanding on some of the themes aired during a Channel 4 debate on Monday evening, Mr Darling said he shared concerns about sluggish exports during evidence to the Treasury Select Committee yesterday. The Chancellor was asked about what impact the 25 per cent depreciation in sterling since 2007 has had.
The Chancellor told MPs: "60 per cent of our trade is with Europe, and Europe as a whole has seen fairly flat growth.
"If you take Germany, for example, where we do export to, its GDP in the fourth quarter was flat; Italy and Spain, markets of ours, they have difficulties, as you know. Ireland is a big market of ours.
"So, I think it will take time for this to come back... But you can't blame everything on the sluggishness of our export markets.
"There will be questions as to just how much our exporters have been willing to take advantage of the fall in the price of sterling to drop their prices to make their products more acceptable.
"It just seems to me that now is a very good time for British exporters to get their foot in the door that might hitherto have been closed because somebody else was in there."
Despite the general gloom about the UK's trade, performance data from the Office for National Statistics yesterday showed that Britain's current account deficit narrowed sharply in the fourth quarter to £1.7bn, from £5.9bn over the July to September period of 2009.
Compared with the third quarter, the reduction in the deficit was mainly due to higher surpluses on income on overseas investments and trade in services. However, there was an increase in the deficit on trade in goods. A part of this has been attributed to the impact of the scrappage scheme, which has sucked in imports of new cars. Some 90 per cent of cars supplied under the scheme were manufactured abroad. By contrast, earnings on UK investments abroad hit their highest since records began in 1964.
Looking forward to the IMF spring meeting on 24-25 April, and the accompanying G20 summit of finance ministers, Mr Darling said that he was "more optimistic now that we can get an international levy or tax than I was six months ago". Current signals are that the proceeds of the tax will be used to boost general government revenues rather than to go into some sort of bank failure insurance fund.Reuse content