Double-dip recession not as deep as previously feared

BRITAIN’S double-dip recession is not as deep as previously feared, with revised figures showing a smaller contraction in the second quarter of the year.

Gross domestic product (GDP) – a broad measure of the economy – fell 0.5 per cent between April and June, according to the Office for National Statistics’ second estimate. That is better than the ONS’s initial 0.7 per cent drop that shocked the City last month.

Despite the upward revision, it still represents the biggest quarter-on-quarter fall in more than three years and means the economy remains mired in the longest double-dip recession since the 1950s.

Falls in the production and construction sectors were smaller than previously estimated and drove the figure higher, while the powerhouse services sector was unrevised, with a 0.1 per cent fall.

Other figures released yesterday showed the UK’s trade deficit increased to £7.3 billion, up from £3.7bn in the previous quarter, as the eurozone debt crisis hit exports – it was the biggest fall since the third quarter of 2010, which wiped 1 per cent off the GDP figure.

Business investment also fell for the first time in more than a year.

The improved GDP figures are unlikely to ease the pressure on Chancellor George Osborne, who came under fresh criticism and was urged to boost the economy last week when figures showed a surprise increase in public sector borrowing in July.

A spokesman for the Treasury said: “Britain is dealing with some very deep-rooted problems at home and a very serious debt crisis abroad, and that is why the healing of the economy is proving to be a slow and difficult process.

“Compared to two years ago, the deficit is down, inflation is down, and there are more private sector jobs.”