Britain??s economy contracted in the second quarter. Economic output fell by 0.8 per cent quarter-on-quarter in the three months to June, after a 2.4 per cent decline in the first quarter, according to the Office for National Statistics?? ??flash? first estimate of GDP.
Although the economy is contracting at a much slower pace than earlier this year, the decline was far sharper than the average 0.3 per cent forecast by economists in a Thomson Reuters poll, and worse than even the most gloomy estimate in that survey.
Within broader GDP, the output of production industries declined by 0.7 per cent from their first quarter level, which itself was 5.1 per cent down on the last three months of 2008.
Sterling fell by a cent against the dollar and euro following the release of the unexpectedly bad growth data.
The weak data prompted economists on Friday to speculate that the Monetary Policy Committee would consider at its next meeting in August whether it should expand the Quantative Easing programme of security purchases to the full £150bn allocated to it, and may even seek authorisation to expand purchases beyond that level.
Economists said that the main surprise in the data was the decline in services output, which fell by 0.6 per cent. The second quarter decline follows a 1.6 per cent drop in services output in the first quarter. Within that sector, business services and finance contributed most to the decline, falling 0.7 per cent, the ONS said.
The fall in output has been the fastest for the past 60 years.
