Fresh UK figures help disperse some of the economic gloom

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The Independent Online

Glimmers of encouragement on the double-dip recession should emerge this week as number crunchers take a more upbeat view of the UK's performance between April and June.

In news that will cheer Chancellor George Osborne, the Office for National Statistics' initial estimate of a 0.7 per cent second-quarter slump, due to the extra day off for the Diamond Jubilee celebrations, looks to have been overly pessimistic.

Britain's builders have also seen a shallower fall than accounted for in initial estimates. Economists say these two factors should add 0.2 of a percentage point to output, taking the UK's overall decline over the quarter to 0.5 per cent.

With the Bank of England's rate-setters pencilling in a 0.5 per cent hit from the Jubilee, the underlying economy is likely to be stagnant rather than shrinking and may even have managed modest growth, experts say.

Retailers also enjoyed a more buoyant June than estimated, which bodes well for the UK's dominant services sector. Stronger figures would also tally with better news from the jobs market after a 46,000 fall in unemployment to 2.56 million.

Investec economist Victoria Clarke said: "If the ONS's overzealous estimate of the hit from the Jubilee applied to services, a further upward revision could be added to the mix.

"Our forecast stands at minus 0.5 per cent, but we consider risks to be tilted to the upside. Such an out-run would make for less scary headlines, while still indicative of an economy stuck in the mud."