-Adds Detail To Version Transmitted At 0830 GMT
-Q2 Preliminary GDP -0.7% q/q; -0.8% y/y

LONDON (MNI) – UK economic output plummeted in the second quarter
as growth was hit by the impact of the Jubilee and exceptionally poor
weather, figures released by National Statistics showed Wednesday.

While the headline fall has been exaggerated by the impact of
one-off factors, and we could see some recovery in Q3, underlying growth
is likely to be close to flat or declining. The poor outturn makes it
more likely that over 2012 as a whole we’ll see little or no growth in
the UK economy.

Total economic output is now down 4.5% below the peak in Q1 2008
and slightly below the level just before the latest government took
power in 2010.

GDP growth fell 0.7% on the quarter in Q2 and was down by 0.8% on
the year. This was significantly below the median forecast for a milder
0.2% quarterly drop and 0.3% decline on the year and was the largest
quarterly decline since Q1 2009.

National Statistics highlighted two special factors in Q2 which had
depressed growth, although were unable to quantify their impact.

The Queen’s Diamond Jubilee meant there was one fewer working day
than usual due to the additional Bank Holiday and the May to June period
was the wettest on record.

Services output fell 0.1% on the quarter, with a notable 1.4% drop
in transport, storage and communication output and a 0.4% fall in
distribution, hotels and restaurants. Business services and finance and
government and other services output rose 0.1% and 0.3% respectively.

For June, National Statistics said that they expected services
output to have fallen by 2.2% on the month.

While services growth was hit by special factors, it was the
construction and industrial sectors which bore the brunt of the negative
Jubilee and wet weather effects.

Construction output plunged 5.2% on the quarter, the weakest since
Q1 2009 with National Statistics estimating that output fell 7% between
May and June.

Industrial production was down 1.3% on the quarter, with National
Statistics estimating output fell 3.5% on the month in June.

Today’s figures are preliminary and subject to revision and more so
than usual due to the uncertainties surrounding the special factors.
Many of the figures for June at this stage are forecast and so caution
should be exercised when looking at the data.

National Statistics’ Chief Statistician Joe Grice said underlying
economic activity was better than the headline figures showed and that
the scope for revisions to the GDP numbers was larger than usual.

He added that today’s GDP figure was a central estimate and there
was equal probability of an upward or downward revision.

NS has not made an estimate of the impact of the Jubilee.

In the May Inflation Report the Bank of England estimated that the
Jubilee may have hit quarterly growth by 0.5 percentage point. At that
time the BOE was forecasting a 0.2% quarterly drop in growth, although
subsequent comments suggest this has already been revised lower and will
be brought down sharply in the upcoming August report.

–London newsroom: 44 20 7862 7491; email: puglow@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]