Large swathes of Britain's service sector suffered their first fall in output since April 2009 last month, a survey showed on Thursday, pointing to a sharp slowdown in economic growth at the end of 2010.
British GDP probably grew by just 0.4 percent in the last three months of 2010, lower than many economists have forecast and barely half the 0.7 percent recorded in the third quarter of the year, survey compilers Markit said.
Prime Minister David Cameron, seeking to soothe fears about the economy and the impact of government austerity measures, warned it would not be easy to return to strong, sustainable growth but said full recovery was within reach..
The Markit/CIPS services purchasing managers' index dropped to 49.7 in a December marked by unusually snowy weather, in contrast to forecasts that it would hold steady at November's reading of 53.0. Readings below 50 indicate contraction.
Sterling weakened by about half a cent versus the dollar on the data.
But the reaction on the government bond market was muted, and economists said the figures did not mean service sector contraction was inevitable in 2011, as activity had bounced back strongly from similar weather disruption in early 2010.