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Pace of UK slide expected to ease UK economy shrinks at slower pace
(about 2 hours later)
Official figures to be released later are expected to show the UK economy continued to shrink between April and June, but at a slowing pace of decline. The UK economy contracted for a fifth successive quarter but at a slower pace than previously.
Economists expect the economy to have shrunk by 0.3% in the second quarter, compared with a 2.4% contraction in the first three months of the year. The Office for National Statistics said the economy shrank by 0.8% between April and June, from a 2.4% contraction in the first quarter of the year.
The UK economy is expected to begin growing again later this year. The latest figure was worse than analysts expectations of a 0.3% decline in economic output.
However, households are likely to continue to struggle as unemployment is forecast to keep rising. The latest figures take the annual rate of decline to 5.6%, with any recovery not coming until later in the year.
The fall likely between April and June should indicate easing conditions in the services, construction and manufacturing sectors.
Data released on Thursday showed a big jump in retail sales in June, adding to evidence that the worst of the recession may be over.
However, many economists expect any recovery to be weak.
Investec economist David Page said: "The second quarter should be the point where the figures begin to improve, given stronger surveys and other evidence suggesting demand starting to flatten out and a more modest pace of destocking.
"Nevertheless it does seem as though it would be an unrealistic stretch for quarterly GDP growth to return to positive territory."
And Vicky Redwood, an economist at Capital Economics, said any overall consumer recovery "will be sluggish".
"Not only is the labour market still deteriorating, but the prospect of tax rises is looming large and households still need to pay off large amounts of debt," she added.