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Business bites: Recession fears loom larger after drop in GDP

FEARS of a UK recession increased as official figures yesterday showed the economy sliding into decline.

GDP fell 0.2 per cent in the three months to the end of June, the Office for National Statistics said in an update confirming its previous estimates.

The definition of a recession — two consecutive quarters of contraction — will be met if the downward trend is found to have continued from July to the end of September.

But the ONS figures also show the economy expanded by 0.6 per cent from January to March, partly due to a wave of stockpiling ahead of the original Brexit date of March 29.

Analysts suggested the second quarter decline was down to business getting back to normal when Britain’s departure from the EU was delayed.

Howard Archer, chief economic adviser at EY Item Club, said: ‘Manufacturing output suffered a major correction in the second quarter as there was a running down of the stocks that had been built up by producers and their clients in the first quarter in case a disruptive no-deal Brexit had occurred at the end of March.’

He predicted that the economy will be shown to have returned to growth in the third quarter.

The strong performance in the first quarter left the annual growth rate at the end of June at 1.3 per cent, better than forecasts of 1.2 per cent.

John Hawksworth, chief economist at PwC, said the data showed ‘no change to the big picture of a slowing economy being propped up by consumer spending as investment has fallen back’.

Investment has been ‘volatile’ because of Brexit uncertainty, he added.

The ONS also reported that an improved method of recording student loan cancellations had shown less money than previously thought was being lent to households by the government.

Woodford facing sack from trust he founded

UNDER-FIRE fund manager Neil Woodford is on the brink of being booted out by the investment trust that bears his name.

As Woodford Patient Capital Trust revealed the value of its fund fell 20.9 per cent to £591million between June 28 and September 26, chairwoman Susan Searle said it was ‘talking to other potential managers’ about taking the reins.

Mr Woodford said sorry to shareholders for an ‘extremely disappointing’ six months but added most firms he had invested in were making ‘good progress’ in line with targets.

Thomas Cook staff tell ministers ‘pay us now’

Demanding help: Former Thomas Cook staff outside the Tory conference in Manchester PICTURE: PA

FORMER Thomas Cook staff have demanded financial support from the government.

The workers did not receive their wages yesterday after the travel giant collapsed last week. And dozens of them — some in their old uniforms — responded by marching outside the Conservative conference in Manchester.

They urged ministers to ‘pay us now’ and waved placards with messages including: ‘Bankers bailed out, Thomas Cook kicked out.’

About 9,000 UK staff were left jobless when the tour operator failed to secure a rescue deal. But the company’s German airline Condor bagged a £336million loan from the Berlin government to keep it flying.

Labour’s shadow business secretary Rebecca Long-Bailey, who joined the marchers, said: ‘It’s staggering how the German government seemed to be on top of the situation, yet ours just sat back on its hands.’

Manchester mayor and former Labour MP Andy Burnham, who addressed the crowd at the protest, called on the government to give Thomas Cook staff their unpaid wages as well as redundancy packages.

Business bites

■ FOREVER 21 has said it intends to shut most of its stores in Europe. The struggling LA-based fashion chain, which has branches in London, Liverpool and Birmingham, has filed for bankruptcy protection in the US.

■ BOSSES at five-a-side football operator Goals Soccer Centres have admitted the £12million black hole in its accounts could be far larger. The announcement came as the firm was delisted from the stock exchange.

■ RAIL companies will have to pay £26million per year to maintain the High Speed 1 train line from London to the Channel Tunnel — over four times the cost a decade ago — under Office of Rail and Road proposals.

■ PRUDENTIAL has been fined £23.8million by the Financial Conduct Authority for not telling pension annuity clients they might get a better deal elsewhere. It has paid £110million so far to compensate people affected.

■ SAVERS have seen Isa interest rates shrink over the past six months. The average two-year fixed-rate deal has dropped from 1.45 per cent in April to 1.26 per cent, according to Moneyfacts.co.uk.