UK economy shrinks 0.7 per cent in second quarter

Friday 28th August 2009

The UK economy contracted by 0.7 per cent in the second quarter in a better than expected fall.

Analyst had predicted GDP would shrink by 0.8 per cent in April to June.

The revised figures from the Office for National Statistics (ONS) said year-on-year the economy fell by 5.5 per cent, a 0.1 point improvement on analyst expectations.

According to the ONS, the improved performance of the manufacturing, energy and car industries all contributed to the GDP figures.

There is also evidence the government's controversial car scrappage scheme had a positive effect.

"An easing in the rate of destocking helped to drive some of the improvement in GDP... and government spending posted a robust quarterly rise," said Vicky Redwood of Capital Economics.

"But neither of these factors will boost growth for much longer. We continue to expect a pretty minimal rise in GDP next year."

Despite today's figures, the UK still lags behind other national economies. The French and German economies both returned to growth in the last quarter with a rise of 0.3 per cent. ADNFCR-1783-ID-19336437-ADNFCR

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