UK Economy Shrank 0.5% in Q4

The data point of the morning: The UK economy shrank 0.5% in Q4 of 2010, compared to a 0.7% growth in Q3 of last year.

This is seriously bad news—especially as 2011 is supposed to be the bad year in the UK, what with the coalition government’s austerity measures, which include cutting government spending, the government workforce, and raising the value added tax from 17.5% to a round 20%.

The bad Q4 number is being blamed on the bad weather by government officials. Yeah, right.

On top of it all, government borrowing rose to a record high level in this past November, though it has pulled back some.

And if that weren’t bad enough, there is the looming issue of UK inflation, which we’ve written about here, here and especially here, where we discussed the final 2010 UK inflation figure of 3.7%.

The question remains: Is the UK the canary in the coalmine for the U.S. economy?

Stay tuned.