Britain’s economy contracts further

Britain’s economy contracts further

LONDON - Agence France Presse
Britain’s economy contracts further

UK finance minister Osborne poses at a construction site. The UK economy slumped 0.7 percent in the 2nd quarter.

Britain’s economy shrank by a worse-than-expected amount in the second quarter, official data showed yesterday as recession tightened its grip on the eve of the London Olympics.

Gross Domestic Product (GDP) slumped 0.7 percent between April and June from the first three months of the year on steep output declines in the construction and manufacturing sectors, the Office for National Statistics said.

Output was also impacted by an extra day’s public holiday in June for Queen Elizabeth’s diamond jubilee celebrations and by very poor weather. Britain suffered its wettest quarter on record in the reporting period.

Deep-rooted problems

“We all know the country has deep-rooted economic problems and these disappointing figures confirm that,” British finance minister George Osborne said in reaction to the data published two days before the start of the Games.

“We’re dealing with our debts at home and the debt crisis abroad ... but given what’s happening in the world we need a relentless focus on the economy.” As well as weak output at home, Britain’s economy is also suffering from the debt crisis in the neighbouring eurozone. Britain is not a member of the eurozone but relies on the bloc for the bulk of its trade.

The April-June contraction was the biggest quarterly fall since the first quarter of 2009 and far worse than market expectations for a 0.3-percent drop, according to analysts polled by Dow Jones Newswires.