United Kingdom: UK economy contracts most in over three years
July 25, 2012
In the second quarter, GDP contracted 0.7% over the previous quarter, according to a preliminary estimate released by the Office for National Statistics (ONS) on 25 July. The figure came in well below market expectations of a 0.2% contraction and represents, in fact, the worst result since the first quarter of 2009. The larger than expected decline reflects, in part, fewer working days amid the Queen's Diamond Jubilee celebrations, which according to the Bank of England may have subtracted as much as 0.5 percentage points off growth in Q2. That said, preliminary estimates are based on a very incomplete set of data and are therefore subject to revisions as further information is incorporated. Revised figures, along with more complete data, will be published on 24 August. The deterioration in the second quarter was broad-based, with all components faring worse than in the preceding three-month period. In particular, the construction sector plummeted 5.2%, which followed a 4.9% decline in the first quarter. Moreover, the industrial sector decreased at broadly the same pace than in the previous quarter (Q1: -3.1% quarter-on-quarter; Q2: -3.2% qoq), while agricultural output plunged 7.0% in Q2, which was worse than the 5.4% contraction witnessed in the first quarter. Finally, the services sector grew 0.7% which, nevertheless, was below the 1.0% expansion seen in the first quarter. Compared to the same period last year, the economy contracted 0.8%, which was down from the 0.2% decline observed in the first quarter.