UK recession less deep than predicted

The UK economy contracted by less than previously predicted in the second quarter, figures have revealed.

Gross domestic product (GDP) has today been revised to a drop of 0.6 per cent, instead of 0.7 per cent, for the months from April and June.

The data from the Office of National Statistics show the year-on-year decline remains at 5.5 per cent.

Investors are hoping for a return to growth in the third quarter, with countries such as Germany and Japan already emerging from recession.

Yesterday, the chancellor Alistair Darling re-affirmed his prediction in the Budget that the UK would see growth by the end of the year.

He told the Labour party conference: 'Many independent forecasters now believe the UK is coming out of recession. I think it is too early to say so with total confidence.

'But I stick with my Budget prediction that, as long as we continue to support the economy, recovery will be underway in the UK by the turn of the year.'

Figures also released today show mortgage approvals for house purchases was down in August from 52,404 to 52,317.

Lending on personal loans also contracted by £0.5 billion, but credit card borrowing rose by £0.2 billion.