UK GDP Revised Higher, Real Income Falls; CPP, Thomas Cook Drop

Marcus Jacob
29 Mar, 2011
New York City

UK GDP in the fourth quarter was revised higher to a shrink of 0.5% compared to previous estimate of 0.6% decline. 2010 economic growth was unrevised at 1.5%. Household spending declined 0.3% in real terms in last quarter of 2010 and for the year declined the most in 33 years.

[R]4:00 PM London – UK GDP in the fourth quarter was revised higher to a shrink of 0.5% compared to previous estimate of 0.6% decline. 2010 economic growth was unrevised at 1.5%. Household spending declined 0.3% in real terms in last quarter of 2010 and for the year declined the most in 33 years.[/R]

UK GDP contracted 0.5% in revised fourth quarter compared to the previous estimate of 0.6% decline according to the latest data from the Office for National Statistics.

Separately, the Bank of England said mortgage approvals in February rose to 46,967 from 46,152 in January. The monthly approvals were the highest since November.

However, the mortgage approvals are still 50% below the levels five years ago as credit conditions remain tight and economic climate remain weak as unemployment level hovers at several decade high.

In addition, the ONS reported today that take-home pay for British workers declined in 2010, the first decline since 1981 and the largest fall since 1977.

Household disposable income adjusted for inflation declined 0.5% in the fourth quarter compared to an increase of 0.5% in the third quarter. For 2010 the disposable income declined 0.8%.

The full force of the government fiscal tightening is still not felt by the economy as only £9 billion of the proposed £111 billion tax increase and spending cuts have been implemented. And, £32 billion of the tax increase and spending cuts are expected to take a bite out of the economy in the next fiscal year that begins on April 5.

FTSE 100 index increased 27.68 to 5,932.17 and FTSE All Share index increased 9.60 to 3,077.82.

Stock Movers

Babcock International surged 3.6% to 598 pence after the company said its order book is strong and its bid pipeline is growing.

CPP Group plunged 48% to 148 pence after the financial regulator raised questions about the credit card issuers’ sales tactics.

Supergroup dropped 26 pence to 1,474 pence after the company chief operating officer Diane Savory resigned from her post and board for “personal reasons.”

Thomas Cook, the tour operator said its Egypt and Tunisia cancelation cost the company £20 million of which £5 million were from direct costs of cancellations and £15 million from the lost margin.

The tour operator also said that bookings are weaker than a year ago in the winter season mainly on the unrest in North Africa but summers bookings are stronger at German tour operator and in Northern Europe.