Investment hit by 'uncertainty'
Saturday 25 February 2012
Businesses are still unwilling to bet on recovery after a worrying plunge in investment spending during the final quarter of last year, official figures showed yesterday.
The Office for National Statistics' initial estimates of a 0.2 per cent slide for the wider economy during the period were left unchanged, but experts blamed debt turmoil in Europe for the 5.6 per cent fall in business spending to £28.7bn over the quarter.
Andrew Goodwin, a senior economic adviser to the Ernst & Young Item Club, said: "The climate of uncertainty has caused firms to sit on their cash and, even after this week's deal for Greece, it's difficult to envisage this situation changing significantly in the short term."
There were some positives, however, as desperate price-cutting by retailers in an attempt to open shoppers' wallets during the autumn helped household spending rise 0.5 per cent – the first growth since early 2010.
Also rising exports combined with weakening imports resulted in a positive trade contribution which added 0.6 percentage points to growth.
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