THE UK’S economy tanked in the second quarter, worsening the country’s double dip recession, according to preliminary figures from the Office for National Statistics (ONS) released yesterday.
GDP fell 0.7 per cent over the quarter, compared to a consensus expectation of 0.2 per cent, according to the preliminary estimate, which computes about 40 per cent of the total survey responses.
This was driven by a sharp dive in construction, of 5.2 per cent, which follows from last quarter’s 4.8 per cent plunge. But the economy appeared weak across the board, with production falling 1.3 per cent, and services inching down 0.1 per cent.
Analysts were shocked by the result, but also questioned whether the economy was in as bad a state as the estimate suggested.
“It’s likely there’s been mis-measurement,” said Andrew Goodwin at the Ernst & Young Item club, “I’d take it with a pinch of salt – in fact I’d go as far as to say the figures aren’t worth the paper they’re printed on.”
“First of all, we expect that some 0.5 per cent of the decline is due to the Queen’s Jubilee; secondly the catastrophic construction decline is unbelievable; and thirdly the combination of rapidly increasing employment and sharply declining GDP implies highly implausible shocks to productivity,” Goodwin argued.
The Confederation of British Industry’s quarterly industrial trends survey, also released yesterday, adds some weight to this challenge, suggesting a generally positive outlook – though it looked at the three months to July, not the three months to June.
On balance three per cent of firms said orders were up in the quarter, while a balance of eight per cent reported output up. A full 13 per cent said employment was up, and those reporting under-utilisation of capacity fell to 52 per cent, the lowest for a year.
On the other hand figures from the British Retail Consortium (BRC) today appeared to back the more gloomy picture. The BRC said that for the first time since it started recording in 2008, the number of retail stores fell, dropping 0.5 per cent on the quarter.