UK economy slowed in second quarter, say economists

The UK economy grew 0.7% in the three months ending in June according to estimates by the National Institute of Economic and Social Research.

That suggests a slowdown from the.0.9% expansion in the three months ending in May.

The institute also echoed recent caution about the obstacles to growth ahead.

'Fiscal consolidation both in the UK and the euro area will restrict growth in the short-term and there is clearly a risk that this rate of growth will not be maintained through the rest of this year,' the institute said.

This morning the International Monetary Fund downgraded its forecasts for UK growth this year and next.

Today's industrial production data provided some cheer showing growth of 0.7% in May, adding to other data suggesting the manufacturing side of the economy is doing well.

With numerous governments cutting spending and growth already slowing in some of the world’s largest economies such as the USA and China, there are concerns global trade will remain muted.

The Travelex Confidence Index’s monthly outlook on international trade recorded a 5 point fall in confidence in June as UK importers and exporters worry spending cuts will threaten the fragile economic recovery.

According to the survey a third of importers and exporters now feel the UK economic recovery is not sustainable, up from one in five in May.

The Office for National Statistics is due to publish the final reading of first quarter output on Monday after it delayed the publication date over concerns about the reliability of some of the figures.

The initial data showed the economy grew by 0.2% and was later revised up to 0.3%. Economists expect it to remain at that level.