U.K. current account gap soared, economy contracted

Britain's economy is facing risks of further instability and slowdown, and is likely to slip into another recession in the first quarter of 2013. The U.K. economy shrank in the last three months of 2012 in line with analysts' expectations, with gross domestic product falling by 0.3%. The contraction was followed by a 2.1% drop in industrial production, the biggest fall since the first quarter of 2009. The economy is widely expected to contract in the first quarter of 2013, and if so, it will fall back into recession again, which is defined by two consecutive quarters of negative growth. The Office for National Statistics also showed that the U.K. current account for Q4 stood at the deficit of 14 billion pounds, compared with 15.1 billion deficit recorded a month earlier. The deterioration in Britain's current account position was mostly, provided by weak exports combined with resilient imports. 

"The long-awaited rebalancing of the economy remains elusive. The consumer has once again bailed out underperforming exports and business investment," said Andrew Goodwin, economic adviser at Ernst & Young. "Prospects for Q1 remain on a knife edge," he added.