BRITAIN'S economy shrank slightly less than previously estimated at the end of 2010, but still suffered its biggest drop since 2009, according to data that underlines the uncertain nature of its recovery.

Yesterday's figures did not shift economists' view that first-quarter GDP data due next month will be the key to whether the Bank of England raises interest rates in the first half of this year, and illustrate the economy's vulnerability as the government embarks on a tough austerity program.

The Office for National Statistics said gross domestic product contracted by 0.5 percent in the last three months of 2010 - the same as its initial estimate in January but a slightly smaller fall than a revised estimate made last month.

"It's still a pretty lackluster backdrop and that probably sets the tone for the first half of this year," said Ross Walker, analyst at Royal Bank of Scotland.

Year-on-year, fourth-quarter GDP growth was unrevised at 1.5 percent, in line with economists' forecasts.

The ONS said that Britain's coldest December in 100 years had knocked 0.5 percentage points off national output, causing the biggest fall in GDP since the second quarter of 2009.

The services sector and the construction sector both suffered their biggest contractions since the second quarter of 2009, when Britain's economy was deep in recession.

Industrial output grew at its fastest pace since the second quarter of 2010, but this did not stop Britain recording its biggest goods trade deficit since records began in 1955.