British Economy Shrinks More Than Expected LONDON - Britain's economy shrank more than expected in the final three months of 2011, but some economists said that improving conditions in Europe could keep the country from falling back into a recession. The economy shrank 0.3 percent from the previous quarter, more than the expected 0.2 percent decline, because companies held back on investment amid concern about consumer demand, the Office for National Statistics said Wednesday. While another recession was an imminent threat at the end of last year, some economists revised their views recently and now expect the British economy to return to growth during the first three months of this year. Daniel Solomon, an economist at the Center for Economics and Business Research in London, said that positive data from the private sector combined with European monetary policy to create "an upward push on the economy." An auction of Italian debt on Wednesday resulted in the lowest rate in more than a year, signaling the return of some investor confidence following government austerity measures and liquidity provided by the European Central Bank. Britain's interest rates, which stayed at a record low for the past three years and slowed inflation, and a fiscal stimulus package from the Bank of England helped offset some of the impact of the government's far-reaching spending cuts. Still, economic growth is expected to remain anemic this year as consumers stay cautious and companies react by scaling back investments. The service sector and the manufacturing and construction industries shrank in the fourth quarter of last year, according to the statistics office. Mr. Solomon said he expected gross domestic product to grow 0.4 percent this year. Signs from companies so far this year have been mixed. Game Group, one of Britain's largest video game retailers, ran out of money on Tuesday and went into administration, putting about 2,000 jobs at risk. Tesco, the supermarket chain, said this month that it would add 20,000 jobs in Britain and GlaxoSmithKline, the pharmaceutical company, said last week it would create more than 1,000 jobs. Mervyn King, the governor of the Bank of England, has said repeatedly that the economic crisis in the euro zone and Britain's austerity measures would weigh on the British economy this year. He predicted that the economy would zigzag between growth and contraction. Mr. King told an economic affairs committee this week that the economy could contract between April and June because of an extra public holiday for the Queen's Jubilee celebrations. He said the additional holiday, on June 5, is likely to affect economic output just as the extra holiday for the royal wedding did last year.