GDP: UK economic growth shrinks to 0.4% as net trade weighs down recovery

Economic recovery in the UK was less than previously estimated in the third quarter of 2015, according to the Office for National Statistics (ONS), who revised GDP quarterly growth for the period down to 0.4% from 0.5%.

The data and statistics organisation published a raft of figures on the UK economy, including GDP growth, National Accounts, and labour productivity. The numbers showed a slower recovery than previously thought, to end a relatively flat 2015.

Ruth Miller, UK economist at Capital Economics, said the National Accounts suggest the recovery "has less momentum than previously thought and still looks worryingly unbalanced". She added that the volatile net trade dragged down GDP growth.

"Q3's rise was still driven by domestic demand. Meanwhile, the current account deficit remained large at 3.7% of GDP in Q3, down from 3.8% in Q2," said Miller.

This comes at an unfortunate time for Chancellor George Osborne, who was recently forced to swallow a £1.3bn (€1.8bn, $1.9bn) rise in public sector net borrowing to £14.2bn in November.

The country's continuously weak trade balance has had a strong impact on the economic recovery in the UK. Howard Archer, chief UK and Europe economist at IHS Global Insight, said the think tank was forced to downgrade the projection of GDP growth in 2015 from 2.4% to 2.2%.

"We see GDP growth coming in at 2.4% in 2016. The consumer still looks pretty well positioned to contribute appreciably to growth in 2016, although much will depend on how earnings growth develops over the coming year after its recent relapse."

Archer said employment numbers were encouraging, but also warned not to be too optimistic. He said: "Productivity is still limited to what it would have been had the trends prior to the 2008-09 recession continued, and it needs to see sustained appreciable improvement going forward if the UK is to enjoy healthy growth for a prolonged period."