LONDON: Britain's economy contracted even faster than previously thought at the end of last year after the first fall in household spending in 18 months, denting expectations for an imminent rise in interest rates. Official data Friday showed the economy shrank 0.6 percent between October and December, worse than an initial estimate of a 0.5 percent decline and against analysts' forecasts for an unchanged reading. Most of the decline was due to severe weather in December, and the government said the figures would not throw its deficit-busting program off track. It noted that survey data so far this year had “exceeded expectations”. Nonetheless, the surprisingly weak data reinforce the case of those on the Bank of England's Monetary Policy Committee who think it is premature to start raising interest rates when the economy still faces severe headwinds. The pound fell a third of a cent against the dollar and hit a one-month low against the euro as investors scaled back bets on a rise in interest rates in the next two months. “The slight downward revision might give the more hawkishly inclined members of the MPC reason to pause for thought,” said Capital Economics analyst Vicky Redwood. However, many analysts said they still expected the BoE to start tightening policy in May to tackle inflation.
