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U.K. Economy Contracted 0.2% in Quarter Through July, Niesr Says

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Aug. 7 (Bloomberg) -- U.K. gross domestic product kept falling in the three months through July as slack in the economy widened, the National Institute of Economic and Social Research said.

GDP fell 0.2 percent from the previous three months, Niesr, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement in London today. The figures are distorted by the additional public holiday in June for Queen Elizabeth II’s Diamond Jubilee, the institute said.

Data today showed British industrial output fell less than estimated in June, indicating the economy may have contracted less in the second quarter than the 0.7 percent previously reported. Still, with demand hurt by government spending cuts and the euro-area debt crisis, the Bank of England will probably cut its economic outlook when it publishes new forecasts tomorrow, according to a survey of economists.

Niesr said its estimates “suggest the U.K.’s large negative output gap is widening” and it doesn’t expect GDP to pass its 2008 peak until 2014.

U.K. industrial production dropped 2.5 percent from May due to the extra public holiday for the queen’s Jubilee, the Office for National Statistics said today in London. That’s smaller than the drop estimated in the second-quarter GDP data, and the ONS said today’s numbers may mean a 0.07 percentage point upward revision to the GDP number.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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