UK economy shrank less than previously forecast

The UK economy shrank in the second quarter – but not by as much as had been previously forecast.

According to a third estimate from the Office for National Statistics (ONS) UK output fell by 0.4%, versus a previous forecast of a 0.5% fall – itself a revision of an earlier estimate of a 0.7% contraction.

Figures on economic output tend to be revised at least twice after an initial ‘flash estimate’, as more data becomes available.

The latest figures offered “some hope”, according to manufacturers’ organisation, the EEF, which noted that investment in manufacturing rose 5.9% in the second quarter.

Ecnomic thinktank the Centre for Economics and Business Research (CEBR) pointed to the revision of construction output, which moved from a 3.9% decline to 3%.

Colin Edwards, an economist with the CEBR, said the figures painted “a marginally healthier picture of the UK economy than previously portrayed”.

But he sounded a note of caution. “The fact remains that the UK is in recession for the second time in four years, while output remains well below pre-financial crisis levels – around 4% lower in real terms.

“The encouragement that can be taken from a 0.1 percentage point upward revision in growth is marginal.”

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