New figures from the Office for National Statistics (ONS) show that the UK economy shrank by less than expected in the second quarter of the year.
The revised GDP figures show an economic contraction of 0.5%, rather than the 0.7% as previously estimated.
This revision is the result of a better than expected contribution from the construction sector in the quarter.
Whilst a positive revision, it does not change the longer term position of the UK economy, which remains broadly flat over the past two years.
These latest figures mean that the size of the UK economy is around 4% smaller than it was at its pre-recession peak.
The revision to GDP figures comes on the same day that Bank of England MPC member Martin Weale spoke out in favour of a further interest rate cut.
Speaking to the Scottish Herald, Weale claimed that cutting interest rates further would have a bigger impact on the economy than more quantitative easing.
Any further monetary policy from the Bank of England needs to find its way to consumers and businesses for it to be effective. There are signs that quantitative easing has not aided the real economy to date, suggesting that further QE would be an expensive exercise in futility.
We believe that UK interest rates could be cut to 0.25% or even to zero by the end of this year.
Photo credit: Flickr/Ell Brown
