UK economy shrank in second quarter

Friday 24th July 2009

The UK economy shrank by 0.8 per cent in the second quarter of this year, official figures showed.

The contraction is twice as high as anticipated by analysts but compares to a 2.4 per cent drop in the first three months.

All areas of the economy, however, saw contraction.

Construction contracted by 2.2 per cent, manufacturing was down 0.3 per cent and services weakened by 1.6 per cent.

An easing in the strength of downturn was expected, after the heavy drops seen so far.

Debate now rages on how the UK will climb out of the recession. The easing in the drop was put down to firms' starting to make orders after emptying inventories.

Some analysts are pointing towards a long march into growth through 2010 and into 2011 with growth described as sluggish.

As the economy moves forwards, the UK faces tax rises that could pull down consumption.

UK consumers are also expected to continue looking towards clearing debts and building up savings. ADNFCR-1783-ID-19280414-ADNFCR

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