By Geoffrey Smith

-- The U.K. economy shrank in the second quarter for the first time in five quarters, but by a fraction less than expected, as surging inflation damped consumer confidence and the Queen's Platinum Jubilee crimped business activity.

Gross domestic product fell 0.1% in the three months through June, a slightly better outcome than the 0.2% expected but a sharp drop from the 0.8% gain posted in the previous quarter. GDP is now 0.6% above where it was before the COVID-19 pandemic, but considerably below the level implied by trends before 2020, suggesting that the pandemic has done lasting damage.

The economy had grown for five straight quarters since the pandemic's second wave, but is expected to head into a long recession later this year as the global surge in energy prices in the wake of Russia's invasion of Ukraine puts intense pressure on household spending. Private consumption fell 0.2% after the first of what is likely to be a series of big increases in regulated energy bills for households.

The figures were helped by a better-than-expected performance from industry in May and June. Industrial output fell by only 0.9% rather than the 1.3% expected, and May's output was revised up to a gain of 1.3% from an initially reported 0.9%. Manufacturing output fell 1.6%, while the previous month's gain was revised up to a gain of 1.7% from a preliminary 1.4%.