MercoPress. South Atlantic News Agency

UK economy growth grinds to standstill in second quarter

The City of London: the heart of the UK's economy

The United Kingdom economy ground to a standstill in the second quarter of 2008 with GDP registering no growth at all according to official figures released on Friday.

The Office for National Statistics said last month that UK GDP had increased by 0.2% between April and June. But on Friday it revised this figure down to 0%, following a reassessment of activity in the production, construction and services industries. The revision means UK's GDP at the end of June was just 1.4% up on a year earlier, and is likely to stoke fears that the UK is headed for recession. It may also strengthen the hand of those calling for a rate cut, a fact that did much to boost the UK stock market. The figures were the weakest since 1992 and end more than 15 years of consecutive growth in the UK. The government said the economy was feeling the effects of global pressures such as high commodity prices and the continuing credit squeeze. "The Government's priority is to guide Britain through these challenging times, while also supporting those hit hardest as a result of these global factors," a Treasury spokesman said. Bank of England governor Mervyn King has warned that the UK economy is in for a difficult and painful period due to a combination of high inflation and rapidly slowing growth. Inflation, which at 4.4% is well above the 2% target rate, could make it more difficult for the Bank to cut interest rates to spur the economy. But analysts said the zero growth reading could lead to lower borrowing costs by the end of this year. Output in the production industries fell by 0.8% in the second quarter, the ONS statement said, compared with a fall of 0.2% in the previous quarter. The main drivers were a 0.8% drop in manufacturing output and a 1.9% drop in the supply of electricity, gas and water. The service sector, meanwhile, fell by 0.2%, with only transport, storage and communications bucking the trend. Worst hit was the construction sector, which recorded a 1.1% fall in activity, following a 0.4% drop in the first quarter