Government figures due out this morning are expected to show a decline in UK economic growth at the end of last year, awakening fresh concern about the fragile state of the economy.
Economists forecast the Office for National Statistics will report a growth rate of between 0.2% and 0.4% for the three months to December, compared with 0.7% during July-September 2010 and 1.1% in the second quarter of last year.
A 0.2% rate would mean the economy had slowed to a standstill almost a year to the day since the UK was officially declared out of recession. Economists suggest government spending cuts and tax rises could reduce quarterly GDP growth by a further 0.1%.
The figures come amid growing signs of deterioration in the economy. Retail data for December was the worst since 1998, not helped by the pre-Christmas snow, and a monthly survey of household finance released on Monday by economic consultancy Markit suggested consumer confidence has hit its lowest since April 2009.
The official inflation rate – the Consumer Price Index – rose again in December to 3.7% and is forecast to hit 5% this year, putting pressure on the Bank of England monetary policy committee to increase interest rates.
The preliminary estimate of UK Gross Domestic Product (GDP) for the final quarter of 2010 is due out at 09.30am.