GDP data underlines stagnant UK economy

The Office for National Statistics (ONS) confirmed the UK economy grew just 0.2% in the second quarter, leaving it unchanged from its first estimate.

That marked a slowing of growth compared to the first three months of the year, when the economy expanded 0.5%.

Meanwhile, on a year-on-year basis, economic growth stood at 0.7% - in line with analysts' expectations.

The figures highlighted the continued economic torpor in the UK, with volatile stockmarkets and public unrest - underlined by the riots earlier in August - suggesting the immediate outlook remains bleak.

And despite consistent outperformance by bellwether John Lewis, the health of the retail sector remains critical as consumers battle higher taxes, high unemployment and downward pressures on wages.

In its second estimate, the ONS highlighted the additional public holidays, the royal wedding and the impact of the Japanese tsunami on car production as factors impeding growth in the period from April to June.

On a sector basis, total services output was 0.5% higher, helped by business services and finance, while construction output also climbed 0.5% - launching a recovery from the 3.4% drop seen in the previous quarter.

Elsewhere, industrial output sunk 1.6% - a downward revision from the first estimate of a 1.4% fall.

Anna Smee, managing director of business consultancy Hundred Consulting, said the uncertainty in markets is set to continue into the third quarter, adding a grim prognosis for the future: "With our two main export markets, the US and Europe, in a state of disarray, and consumers more cautious than ever at home, growth in the third and fourth quarters is unlikely to inspire."