The economy is like our weather

Cool for the time of year with occasional heavy downpours

There was hope for some rest from the relentless round of economic gloom and doom today with the FTSE rising again, and for the last 9 days. Although pessimists shrugged it off as a market over reaction to a few passing sunbeams.

Sales in UK shops shot up 1.2% in June following as a few hot, early summer days boosted clothing purchases, official figures show. The jump was much more than the 0.3% rise expected by economists. Retail sales had fallen 0.9% in May. And Mortgage approvals by the major banks increased to a 15-month high in June, according to the British Bankers' Association (BBA). Some 35,235 mortgages were approved for house purchases in June, up from 31,919 the previous month, the BBA said. The figures reflected the banks' increased ability to lend and was 65% up on the same month a year earlier.

However the Bank of England concluded today that the UK economy contracted 0.8% between April and June, this was more than double the figure economists had expected.
While an improvement on the previous quarter, the figures may indicate that the recovery could take longer than previously had been thought.

The contraction was much less than the 2.4% seen in the first quarter but was still above analysts' 0.3% prediction. The latest figures take the annual rate of decline to 5.6%, the biggest fall since records began in 1955.

Liam Byrne, Chief Secretary to the Treasury, said that he was cautious but confident that growth was going to return at the end of the year. "We are not out of the woods by any stretch of the imagination, but what today's figures show is that the pace of the downturn is easing," he said.

Industry groups, including APA, called on the Bank of England to continue its actions to stimulate the economy.

Gareth