By Marcus Leach

Fears that the recession in the UK could deepen over the coming months have been eased by the news that industrial output fell less than estimated in June.

According to the Office for National Statistics (ONS) industrial production dropped 2.5% from May due to the impact of the additional public holiday for the queen’s Jubilee.

With the release of this data the GDP has been revised up by 0.07% upward revision to the 0.7% decline.

“While many expected a large decline in manufacturing output in June due to the Queen’s Jubilee, the decline was less than some predicted, and less than the ONS implied in its provisional GDP estimate for Q2 2012," David Kern, Chief Economist at the British Chambers of Commerce (BCC), said.

"However the decline is disappointing, and the latest index of production indicates that manufacturing output will record a 2% fall in 2012, and the economy as a whole will be in negative territory.

“Longer-term trends in manufacturing are still disappointing. Manufacturers and businesses in other sectors are adjusting to a more difficult reality of weaker growth prospects. But British businesses have considerable potential to make progress, and it is down to the government to help them fulfill this. As the government continues with steps to reduce the deficit, and problems in the eurozone continue, more action is needed to help the economy return to growth.

“More QE is not the most effective remedy. The government should concentrate on aggressive deregulation, infrastructure spending, ensuring the Funding for Lending Scheme is successful, and steps aimed to help manufacturers, and other businesses, export.”

Key points:

- The seasonally adjusted Index of Production fell by 4.3 per cent in June 2012 compared with June 2011

- The seasonally adjusted Index of Manufacturing fell by 4.3 per cent in June 2012 compared with June 2011

- Production fell by 2.5 per cent between May 2012 and June 2012, with manufacturing falling by 2.9 per cent

- The moving of the late May 2012 bank holiday to June 2012 and the additional bank holiday for the Queen's Diamond Jubilee were likely contributing factors to the month on month decline in the production and manufacturing sectors

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