The UK economy shrank less than first thought in the second quarter despite a hefty drag from trade, but the wider picture of economic weakness was little changed, data on today showed.
Second quarter output fell 0.5 per cent, compared to an initial estimate of 0.7 per cent, depressed by one-off factors including unusually wet weather and an extra public holiday to mark Queen Elizabeth’s 60 years on the throne.
Economists expect a modest rebound from July but business surveys continue to paint a grim picture, keeping pressure on Chancellor George Osborne to find a tonic for growth and the Bank of England to provide more stimulus through lower interest rates or bond-buying.
The fall reported by the Office for National Statistics was still the biggest drop since the first quarter of 2009 – when the economy was hit by the immediate aftermath of the financial crisis.
“The headline is a bit less frightening but the bottom line is pretty much the same: the UK economy has shrunk for three consecutive quarters,” said Vicky Redwood of Capital Economics.
“Given the drags from the fiscal squeeze, Eurozone crisis and high domestic debt levels, we still doubt that a strong recovery lies ahead.”
Sterling fell to a two-week low against the euro and British debt prices rose, as some investors had bet on a bigger upward revision.