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Economy contraction not as marked as first thought

Economy contraction not as marked as first thought

Category: Economy

Updated: 29/09/2009
First Published: 29/09/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Having been revised downwards a month ago, the fall in Gross Domestic Product (GDP) in the second quarter of the year has been changed once more.

The Office for National Statistics (ONS) has said that the economy contracted by 0.6 per cent in the period between April and July. It had originally said that the fall in GDP was 0.8 per cent during the period, although this was revised to 0.7 per cent last month.

While the decline is 5.5 per cent compared with the same period in 2008, the rate of the downturn in the UK economy has certainly slowed. Improved performance in the construction and manufacturing industries is the main reason for this latest revision.

Output in the construction industry actually fell by 0.8 per cent in the second quarter of 2009, significantly less than the original estimate of 2.2 per cent, while the manufacturing industry's output declined by 0.1 per cent, compared to 5.4 per cent in the previous quarter.

The year-on-year decline in the UK's economic output remained unchanged at 5.5 per cent, having been revised from 5.6 per cent in the August.

While this latest downward change offers some encouragement, the UK still lags behind many of its European neighbours, with both Germany and France exiting recession in the second quarter, as was also the case with Japan.

Chancellor Alastair Darling suggested that the UK is nearing an exit from recession in his speech to the Labour Party, but would not be drawn on exactly when it would happen.

"I think it is too early to say so with total confidence," he told the conference in Brighton.

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