Business investment fell by 1.5% in the quarter as fears over the Eurozone and a lack of access to funding weighs, while exports fell by 1.7% following the recent GBP strength and the lack of global aggregate demand. This paints a picture of an economy that is holding on grimly to some semblance of performance and that further headwinds from the Eurozone or elsewhere could be catastrophic.
Annalisa Piazza at Newedge Strategy adds that the picture still remains "very weak":
The expenditure breakdown shows a very sluggish picture for the UK economy, due to the combination of the slower business cycle and negative effects of the Jubilee liong weekend in early June.
...
Looking at the main sectors, industrial activity fell by 0.9% q/q, partially affected by the closure of some plants during the long weekend in June. The services industry fell by a modest 0.1% q/q whilst the construction sector remained a major drag, falling by nearly 4%. part of the decline might be seen as an effect of bad weather conditions in June.
All in all, some one-off factors might explain part of the 0.5% decline in UK GDP. However, we still see a very weak picture in the details and no signs that the economy might recover any time soon.
09.46 Although the the second-quarter recession is shallower than initially feared, commentators point out that the overall picture is still none too rosy.
09.31 As expected, Britain's GDP has been revised up to a -0.5pc contraction in the second quarter, compared to the previous estimate of a 0.7pc shrink.
The contraction might have been less than previously feared, but it's still the biggest quarterly fall in GDP since the first quarter of 2009.
09.13 The timing of these talks between Merkel and Samaras appear to be a bit of a movable feast; it now appears they will kick off at 10.45 UK time.
Other political events happening today include a Spanish cabinet meeting and Italy's Mario Monti is also meeting with his cabinet to review their new plan to spur economic growth.
08.47 Even though Angela Merkel and Antonis Samaras are meeting for crisis talks today, we're not expecting any decisions to come out of the chinwag.
Earlier this week when the German chancellor visited the Molodvan capital, Chisinau, she said "we won't find solutions on Friday", reiterating that leaders must await a report being drawn up by the troika of Greece's international creditors.
Angela Merkel takes a seat in Moldova.
08.34 Even as Angela Merkel meets Antonis Samaras, the German government is reportedly calculating the economic cost of a Greek exit from the eurozone.
A special working group, led by deputy finance minister Thomas Steffen, is working on scenarios in the case that Greece is forced to withdraw from the 17-nation bloc, the Financial Times Deutschland reported today.
"Colleagues are making calculations about the financial consequences [of an exit] and are considering how a domino effect on other euro member states might be prevented," it quoted a finance industry source as saying.
The ten-member working group, which is made up of officials from various departments of the finance ministry, wanted to be fully prepared for a possible "negative scenario," the source added.
08.25 Antonis Samaras might be expected to ask Angela Merkel for more breathing space, but others are urging Greece to press ahead with tough reforms.
Klaus Regling, the head of the European Stability Facility - Europe's bailout fund, has said that Greece's future in the eurozone depends on Athens' ability to implement painful economic reforms. Giving a lecture in Singapore, he said:
Nobody wants to see Greece leave the euro area. It would be the most expensive solution for Greece and for other member states, and I also don't want to see Greece leave.
But it's also true that it depends on Greek action. They must implement the structural and fiscal adjustments they committed to undertake in exchange for receiving financial assistance.
They have to deliver, otherwise financial assistance could stop, not because we want it to stop but two sides of the bargain have to be in place.
08.15 On the subject of economic data, we're also expecting the latest estimate of Britain's GDP today. In July, figures showed that the UK economy contracted by 0.7pc in the three months to the end of June.
But, the Office for National Statistics is now expected to revise up its initial estimate of second-quarter GDP to -0.5pc in light of better-than-expected construction and industrial production figures.
08.10 The latest round of eurozone shuttle diplomacy comes against a backdrop of economic ill health. Disapponting data yesterday showed the downturn in the eurozone economy had extended into a seventh month, with the composite index coming in at 46.6 in August, compared to 46.5 in July. A number below 50 marks a contraction.
Services activity shrank to 47.5 from 47.9, marking a two-month low. Manufacturing output ticked up, however, rising to 44.6 from 43.4 in July.
Rob Dobson, senior economist at Markit, commented:
The August Markit Eurozone Flash PMI reinforces the prevailing view of the economy dropping back into recession during the third quarter of 2012. Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5%-0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook.
08.05 Greek prime minister Antonis Samaras is travelling to Berlin for talks today with Angela Merkel in an effort to gain some breathing space for his crisis-wracked country. The talks should start at around 11.45 UK time.
Their chinwag follows a meeting between Mrs Merkel and Francois Hollande yesterday, where the German chancellor urged Greece to stick to its reforms, saying:
It?s important to me that we all stand by our obligations and wait for the troika report and see what the result is. We and I will encourage Greece to pursue the path of reform that demands a lot from the people.
08.00 Good morning and welcome back to our live coverage of the European debt crisis.
Debt crisis live: archive
Source: http://telegraph.feedsportal.com/c/32726/f/579300/s/22aed1e1/l/0L0Stelegraph0O0Cfinance0Cdebt0Ecrisis0Elive0C94957530CDebt0Ecrisis0Elive0Bhtml/story01.htm
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