Quantative easing now back on the cards as UK economy shrinks by 0.5%

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The ONS also announced that the economy grew by 1.7% year on year, much less than the 2.6% forecasted. Economists have blamed the contraction on the wintry weather that affected most of Britain in December.

Mark Bolsom, head of the UK trading desk at Travelex Global Business Payments, commented: "We knew that snow had seriously impacted retail sales in December but this will come as a massive shock; nobody expected contraction.

"It's a real disaster, given that January's VAT hike will drain even

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