"The pound slid to new lows on Friday after it emerged that an apparent improvement in Britain's growth late last year disguised the fact that the Office for National Statistics has actually cut its estimate of Britain's economic output. ".....
"In fact, the official estimate of the level of economic output in the fourth quarter was actually £133m lower than the ONS's previous estimate, at £315,712m. The ONS also revealed that the peak-to-trough fall in economic output was, at 6.2pc, significantly steeper than the 6pc decline previously estimated – making this the deepest recession since comparable records began just after the Second World War, and by most yardsticks the most severe economic contraction since the 1920s.
Andrew Lilico, chief economist at Policy Exchange, pointed out that the lower estimate of GDP would have far-reaching consequences for the public finances. He said: "A political consequence is that, since the economy will now be smaller at the start of the 2010/11 budget year, tax receipts should now be expected to be lower, so the 2010/11 and 2011/12 deficit projections will need to be revised up – perhaps to above £200bn – even if the deficit ends up fractionally down this year. That makes early spending cuts more urgent."