The construction sector presented a significant drag on the economy, with output decreasing by 5.2% compared to Q1, following a drop of 4.9% from the final quarter of 2011 to the first quarter of this year.
Meanwhile, the services sector remained relatively flat, with only a 0.1% slump on the activity seen in Q1 and the production industries reported a 1.3% fall in output compared to the first quarter.
Q2’s fall in GDP growth represents the third quarter in a row the UK’s economic activity has been negative, making it increasingly likely the country will be declared officially in a double dip recession.
What’s more, the growth trend seems to have reversed, from a slight improvement in Q1 of -0.3% compared to -0.4% in Q4 2011 back down to -0.7%.
The ONS said the impact of the extra bank holiday for the Queen’s Diamond Jubilee was not possible to work out at this stage, but would be looked at when the data sets for later periods are available.
It also suggested the bad weather in the quarter might have had an impact in some sectors.
Trevor Greetham, director of asset allocation at Fidelity, said the government should look to boost its own spending in the face of a public that are unwilling or unable to borrow.
"Borrowing your way out of a recession isn’t as mad as it sounds. With 10-year gilt yields at a record low of 1.5%, the markets are sending a clear signal that there is substantially more headroom for counter-cyclical fiscal stimulus. We are saving our way into debt. Keynes would shudder."
