Q2 growth contraction not as bad as feared, says ONS

Friday 28 September 2012

The UK economy contracted by less than previously thought during the second quarter of 2012, it has been reported.

According to the Office for National Statistics (ONS), gross domestic product (GDP) fell by 0.4 per cent between April and June, down from the previous estimate of a 0.5 per cent reduction.

When the ONS published its first GDP estimate for the quarter, it reported a 0.7 per cent fall in GDP - pointing to another deep recession.

But the latest revision may offer further hope to business leaders, particularly in light of anecdotal reports of growth during Q3 2012.

David Kern, chief economist at the British Chambers of Commerce, said that both construction and manufacturing fared better between April and June than originally reported.

Indeed, he suggested that the ONS figures may still be too gloomy, given the improved levels of confidence seen within the private sector of late.

"Three consecutive quarterly declines in GDP since the fourth quarter of 2011 are difficult to reconcile with rising employment and falls in the jobless rate," Mr Kern stated.

"However, it is clear that the UK economy has been stagnant for too long and bold measures are needed if we are to return to growth."

He said the economy will face "difficult challenges" over the next year as the government perseveres with its deficit cutting plan, and continued problems in the eurozone create obstacles for UK exporters.

"Bold initiatives are needed from government so the private sector can drive recovery, invest, export and create jobs," Mr Kern added.

Posted by Steve Williams