By Marcus Leach

Despite a tough economic year to date the UK's economy shrank less than was first thought in the second quarter, suggesting that the early roots of recovery are starting to show.

The economy shrank by 0.4% in the April-to-June period, the Office for National Statistics (ONS) said in its third estimate of gross domestic product (GDP).

Whilst still not brilliant, the revised figure of contraction, 0.5%, is marginally better than the original 0.7% prediction, especially given that analysts had been expecting no change to the second estimate.

However, despite this revision there is no escaping the fact that the economy has now contracted for three straight quarters.

"It's not as bad as we first thought, but it's still abysmal," Jason Conibear, trading director at forex specialists, Cambridge Mercantile, said.

"0.1% is neither here nor there in the grand economic scheme of things.

"We're still deep in the red and there's no sign yet that any sectors of the economy have any real momentum.

"With the European storm really starting to blow now, the pressure on the economy will only get more intense. The further ahead we look, the more ominous things appear.

"There may well be an Olympics-driven pick-up in the third quarter, but beyond that where is the growth coming from?

"You need demand to grow, and demand, both domestic and overseas, just isn't there. If anything, it's contracting.

"At home, doubts remain whether the Funding for Lending Scheme is having a material impact and getting through to the areas of the economy that really need it.

"As for the Business Bank, it's just another idea right now and the economy doesn't need ideas, it needs actions – and it needs them now, not in 2014.

"Some claim we'd be out of recession once you factor in the appalling weather and Jubilee during the second quarter, but this is mere clutching at straws."

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