Snow blamed for economy's shock decline

The UK economy contracted by 0.5% between October and December last year and the wintry weather was partly to blame, the Office of National Statistics (ONS) has said.

The news shocked analysts who had predicted a small growth. It was actually the first GDP decline since the third quarter of 2009 driven by a 0.5% drop in the UK's services sector which is responsibile for over 75% of the total economy.

Despite experts saying that the development will heighten fears of a double-dip recession, chancellor George Osborne remain defiant. "These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by the terrible weather in December," he said.

"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 expected.

"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."

Small business experts however claimed that the setback means the government needs to focus even stronger on supporting entrepreneurs.

"So far 2011 has been nothing but bad news, with the rise in VAT and fuel duty, high unemployment and now growth going back into negative territory," said John Walker, national chairman of the Federation of Small Businesses.

"It is clear that the government can't just cut its way back to growth and that 2011 is only going to get tougher as the impact of the VAT rise and the increase in fuel duty kicks in.