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Double-dip 'is not as deep as feared'

By Holly Williams

The UK's double-dip recession is not as deep as previously feared after revised figures showed a smaller contraction in the second quarter of the year.

The Office for National Statistics (ONS) said gross domestic product (GDP) fell 0.4% between April and June in the second upward revision.

Its initial estimate of a 0.7% contraction shocked the City in July, but smaller than previously thought falls in the production, manufacturing and construction sectors improved the decline to 0.5% last month and now 0.4%.

Hopes are now mounting of a return to growth in the third quarter after Bank of England Governor Mervyn King said last week there were "signs of a slow recovery".

Retail figures from the CBI also offered some welcome cheer after revealing a modest sales increase.

This development had been expected by economists after the ONS recently revised output from the construction sector up from a fall of 3.9% to 3%.

The ONS has also revised up output from the production industry from a drop of 0.9% to 0.7% and manufacturing output from a fall of 0.9% to 0.8%.

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