'preliminary estimates are that UK economy contracted by 0.7% in Q2 2012 as a large reduction in the construction sector impacted on this'; with
reference to extraordinary 'holidays' being one reason for the decline.

This is not good, but frankly, I think should not have been unexpected by anyone. Moreover, consider the attribution to holidays is even mentioned as a reason for the decline. There arguably is 'something bordering on desperation' in that.

Q3 might be a different story, as the London Olympic Games then are likely to play a role in the possibility of better growth numbers. However, even if that proves to be the case, watch for poor UK Q4 numbers as all construction related to the Olympics will have largely 'run its course' by then.

The continued UK economic contraction in Q2 has been described by one economist as 'a disappointing outcome', and by another as 'a nasty surprise'. In turn, I find this surprising. Based on my reading and thinking, I would have been surprised if the UK economy had shown growth in Q2.

Context #1: The UK is an important world economy. Positive economic growth is fundamental to a country's economic well-being. What goes on economically in the UK has an indirect effect on what goes on economically elsewhere.

Context #2: When reading what 'experts' have to say - be they economists or 'experts' in other disciplines - consider that what they say should never be accepted simply because they are seen as, or hold themselves out to be, 'experts'.

Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining and Oil & Gas Companies listed on the Toronto and Venture Exchanges. Ian can be contacted at icampbell@srddi.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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