The economy expanded by just 0.2 per cent between April and June- the slowest pace since the first three months of 2005, according to the office for National Statistics. These figures confirm the reduction in house building, has impacted on economic growth in the second quarter of the year, as the UK’s slow down of the housing market gathered pace.
The figures come amid fears of recession after recent industry surveys signalled contracting activity in construction, services and manufacturing sectors during June. The annual rate of growth in gross domestic product also slowed to 1.6 per cent, again the lowest for three years.
The quarterly growth performance would have been worse if not for an improvement in the services sector, which accounts for over 70 per cent of the economy. The service sector grew by 0.4 per cent in the second quarter of 2008, compared to 0.3 per cent in the first quarter.
The impact of the credit crunch on a struggling housing market was underlined as construction output fell by 0.7 per cent, following the decision by many house builders to shelve new projects since the beginning of this year.