UK GDP sees shock 0.7% contraction in Q2

The UK economy shrank by 0.7% in the second quarter of the year, a far worse contraction than economists had forecast, keeping the UK mired in recession.

The first reading of the data from the Office for National Statistics showed a quarter on quarter fall much greater than the 0.2% contraction analysts had expected. It will come as a serious blow to the government as the impact of its austerity measures kick in and the eurozone crisis acts as a drag on growth. Economists had also been expecting the public holiday for the Queen's Diamond Jubilee to inhibit output. ONS figures show output of the production industries decreased by 1.3% over the quarter, following a decrease of 0.5% between Q4 2011 and Q1 2012. Construction sector o...