The UK economy likely contracted for a third straight quarter in the
three months to June, deepening the country's recession, a think-tank
said Tuesday.
The economic performance was distorted by the additional public
holiday to celebrate Queen Elizabeth II's Diamond Jubilee, and
underlying growth was more robust than the data suggest, the National
Institute of Economic Research said.
NIESR estimates gross domestic product contracted 0.2% in the second
quarter, compared with a 0.3% drop in the first quarter of the year.
"These data are distorted by the additional bank holiday for the
Diamond Jubilee," NIESR said. "Underlying growth was more robust than
these headline estimates suggest."
It calculates underlying GDP grew 0.2% in the three months to June
compared with the first quarter.
The UK economy is in recession, defined by most economists as two
consecutive quarters of contraction. GDP shrank 0.3% in both the first
quarter of 2012 and fourth quarter of last year, compared with the
previous period, according to official data from the Office for
National Statistics.
The ONS said Tuesday industrial production rose 1.0% on the month in
May, while the UK's goods trade deficit with the rest of the world
fell to 8.4 billion pounds ($13 billion) as export demand surged.
May's data were altered by moving the May Day break into June, the ONS
said.
Economists said the gains will be reversed in June.
"Given that positive Jubilee effects are showing up in May we now see
greater downside risks to our conservative estimate of the
month-on-month fall in output between May and June," said Royal Bank
of Scotland economists.
NIESR also forecast a 0.8% decline in second-quarter industrial
production compared with the previous three months.
Write to Ilona Billington at ilona.billington@dowjones.com
(END) Dow Jones Newswires
July 10, 2012 10:35 ET (14:35 GMT)
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