UK economy shrinks by 0.2% in last three months of 2011

UK economic activity shrank by 0.2% in the last three months of last year according to official figures.

It marks a sharp drop in economic activity from the third quarter of 2011, when gross domestic product (GDP) expanded by 0.6%.
The figures, from the Office for National Statistics (ONS), are a preliminary estimate, which could be revised either up or down by 0.2%.
The ONS figures also show that the economy grew by 0.9% during 2011.
'Eurozone situation' The gain for the year is in line with official targets.

Shadow Chancellor Ed Balls says the government should "change course" on its economic policies

The Chancellor, George Osborne, said the figures were disappointing but not a surprise.
"They are not entirely unexpected because of what's happening in the world and what's happening in the eurozone crisis," he said.
"The truth is that dealing with those problems is made more difficult by the situation in the eurozone."
Ed Balls MP, Labour's shadow chancellor, said the fall in GDP was linked to the government's cuts in public spending, which was curbing domestic demand: "The British recovery has been stalling since the government's spending review in the autumn of 2010, but now the economy has gone into reverse.
"By clobbering the economy with spending cuts and tax rises that go too far and too fast, the government has left us badly exposed if the eurozone crisis deepens this year."