GDP fell 4.6 per cent in the 1980s recession, by 2.5 per cent in the 1990s recession and by 6.4 per cent in the 2000s recession.
The growth figures came in well below forecasters’ expectations, but analysts stressed that the initial estimates were subject to revision. Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club , said that the figures "did not square with what any of the survey indicators are telling us."
Chancellor George Osborne said the figures were disappointing.
"We have had the coldest weather since records began in 1910 and this has clearly had a much bigger impact on the economy than anyone forecast. It’s notable that sectors of the economy that are less affected by the poor weather, such as manufacturing, continue to perform strongly, helping to rebalance our economy.
"However, it would be disastrous to change a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis.
"We will not be blown off course by bad weather."
Richard Sexton, Director of e.surv chartered surveyors said,
“In the words of Corporal Jones, don’t panic. First, this is only an initial estimate, based on returns that are about 50 per cent incomplete. Second, December’s cold snap will have had a significant and material effect on the figures. That makes it tricky to plot any meaningful trend from this data. Third, it’s unfair to judge these stats against the Q3 2010 – that was an outstanding quarter.
It’s tomorrow’s economic news that’s the most important of the week. The publication of the minutes of the Bank of England’s most recent Monetary Policy Committee will tell us whether Andrew Sentance has persuaded any of his eight fellow members to vote for an increase in interest rates. I certainly hope not; it could be a disaster for the property and mortgage industries – although we would see an initial rise in remortgage activity as a result. Ultimately, both sectors need further stimulus rather than additional disincentives.”
Nicholas Leeming, commercial director at Zoopla.co.uk, said:
“This is the death knell for any thoughts the Bank of England were having on raising interest rates over the next few months. Good news for anyone on a tracker or SVR mortgage, but new buyer confidence will be knocked and this could have an impact on the property market in the first quarter of this year. Growth is likely to be revised up as more figures become available but these preliminary figures won’t help sentiment. With lenders unlikely to provide any additional mortgage funding this year the government must consider what incentives can be introduced to help the property market. The government cannot cut the UK back into health; consistent growth can only be built on strong markets and perhaps most crucially a healthy property market.”
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