This morning Chancellor of the Exchequer George Osborne was probably able to breathe his first sigh of relief for several weeks.
The most recent data has shown that in the second quarter the UK economy contracted less than estimated. Although the difference was minimal this is the first indication for some time that the UK is inching towards a better position for economic recovery. The figures also lend support to those surveys and data releases which are gesturing towards a third quarter return to growth.
According to the Office for National Statistics, in the three months from April to June Britain’s Gross Domestic Product (GDP) fell 0.4 per cent on the quarter, and GDP was 0.5 per cent lower than during the same period of 2011.
As economists had forecast that both rates would remain unrevised (demonstrating a 0.5 per cent drop on both the quarter and the year) this is a positive development, albeit a very slight one.
Unfortunately it’s not quite time to start restocking your caviar supplies.
The figures compiled by the ONS also showed that despite a quarterly rise of 1.9 per cent in real disposable income, household spending still fell 0.2 per cent. Manufacturing production and services output also declined, by 0.8 and 0.1 per cent respectively. In the second quarter the largest drag on the economy remained drooping construction output, which slumped 3 per cent.
Second quarter current account data showed that Britain’s global deficit had leapt to a record high of 5.4 per cent of GDP, up from the first quarter’s revised deficit of 15.4 billion to 20.7 billion.
As the current double-dip recession has proven, the fragility of the UK economy is not something which will soon be overcome. Economists are still predicting that the Bank of England will intervene and extend its current round of quantitative easing asset purchases.
The Pound to Euro exchange rate is currently trading at 1.2589
The Pound to US Dollar exchange rate is currently trading at 1.6183
The Pound to Australian Dollar exchange rate is currently trading at 1.5564
The Euro to US Dollar exchange rate is currently trading at 1.2852
The Euro to Pound exchange rate is currently trading at 0.7941
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