The UK economy contracted 0.7 percent in the second quarter. The fall in GDP (gross domestic product) was less than the 0.8 per cent calculated last month, the Office for National Statistics (ONS) said today in London. Meanwhile, the GfK NOP Consumer Confidence Index remained steady in August for the third month in a row, holding at -25.

The UK economy has contracted 5.5 per cent since the recession began in the second quarter of 2008, today's figures show. In the early 1980s, the economy shrank 6 percent over seven quarters.

The ONS said between quarter one and quarter two of 2009: The volume of output in the production industries fell by 0.6 per cent, within which manufacturing fell by 0.2 per cent.

Output of the service industries decreased by 0.6 per cent.

Construction output is estimated to have fallen by 2.2 per cent.

In real terms, household expenditure fell by 0.7 per cent and gross fixed capital formation fell by 4.5 per cent.

GDP at current market prices showed zero growth.

Compensation of employees rose by 1.0 per cent and the gross operating surplus of corporations fell by 3.6 per cent.

Consumer Confidence

The overall Gfk NOP index score for consumer confidence this month remained at -25, eleven points better than this time last year; but historically still a low level.

Rachael Joy in the Consumer Confidence team at GfK NOP commented today:""Our index for UK consumers’ confidence in the economy has remained stable for the third month in a row, with the score showing that, while UK consumers are still cautious about the economy, they are less depressed than this time last year. There has been a slight drop compared to last month, in confidence for the general economy in the coming 12 months – but compared to this time last year, we’re showing significantly less depression when looking to the future. Recent reports of housing market improvements and economic recovery may well be lifting the public confidence.”