GDP decline not as bad as feared

Britain's builders fared better than expected between April and June, giving another small shot in the arm for the nation's dire economic performance over the quarter.

Official figures showed a 3.9 per cent fall in construction output during the three months, a smaller decline than the 5.2 per cent assumed by number-crunchers when compiling growth estimates for the quarter. In combination with better news from manufacturers this week, the Office for National Statistics' shock 0.7 per cent decline is likely to be revised higher to a shallower 0.5 per cent fall.

Allowing for the impact of the Diamond Jubilee holiday – which the Bank of England reckons knocked 0.5 per cent off growth – the UK is stagnant rather than shrinking, experts said.

IHS Global Insight's Howard Archer said: "The underlying economy may have been essentially flat in the second quarter."

The more upbeat news contrasted with dire trade figures from China which shook world markets after annual export growth slowed to just 1 per cent.