THE SIZE of the second quarter drubbing to the UK economy was revised down again yesterday, as extra data showed that manufacturing, construction and production fell less than previously thought.
GDP fell 0.4 per cent between the first and second quarters, the Office for National Statistics revealed, 0.1 percentage points down on the first revision, and 0.3 percentage points shy of the first estimate.
This revision raises the possibility that without the impact of the Queen’s Jubilee – which is thought to have cut around 0.5 percentage points from GDP growth in the second quarter – the economy would have been on the path to recovery.
“The underlying trend was most likely one of very modest growth after allowing for the lost working day due to the Jubilee,” said Chris Williamson at Markit economics.
Many analysts now expect growth – though modest – to return in the second half of the year. “A rebound is likely for the third quarter,” Williamson claimed, “Data such as retail sales, industrial production, tax receipts and exports have all suggested that the economy picked up again in July, and the PMI surveys improved again in August.”
Bank of England rate-setter Paul Fisher agreed with this assessment in an interview with The Sun. The economy would rebound in the third quarter with “a very strong GDP number,” he said.
Despite this optimistic outlook, there is a widespread expectation that the Bank will extend its quantitative easing programme in November, when the current £50bn package of asset purchases is completed.
“More stimulus from the Bank of England remains highly likely in the fourth quarter,” said Howard Archer at IHS Global Insight, explaining his judgement with reference to the still weak economy.