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Construction Industry Blamed For Double Dip Resession

The Office of National Statistics has cited across the board weakness in manufacturing and construction as the main cause of the worst double dip recession in 50 years.

GDP fell by 0.7% in the second quarter of 2012, exceeding City analyst's predicted 0.2% fall. In addition to manufacturing and construction, the ONS identified the Jubilee weekend as partly responsible for the loss of output.

Construction output fell by 5.2% between Q1 and Q2 this year. Industrial production dropped by 1.3%.

The Chancellor of the Exchequer, George Osborne, blamed "deep-rooted economic problems" on the UK's performance: "We're dealing with our debts at home and the debt crisis abroad," he said. "We've made progress over the last two years in cutting the deficit by 25% and businesses have created over 800,000 new jobs. But given what's happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that's exactly what we're doing."

Analysts in the City had expected a 0.2% drop in gross domestic product in the three months to June and were stunned by the scale of the fall in activity. The decline followed the 0.3% fall in the first three months of 2012 and a 0.4% decline in the final quarter of 2011.

Officials at the ONS said it was hard to assess the full impact of June's additional public holiday on GDP in the second quarter, but officials expect a bounce back from the loss of production in the third quarter, when the London Olympics should also provide a boost to activity.

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