Office for National Statistics

The UK economy is in "a very deep crisis" and it is difficult to predict when it will recover, according to Business secretary Vince Cable.

Some British pensioners, as well as investors in index-linked gilts, face lower returns if proposals to align the retail prices index (RPI) measure of inflation with the consumer prices index (CPI) are approved.

The UK's main inflation rate fell back towards the 2% target in August after reversing a surprise jump the previous month.

The Office for National Statistics has revised up its estimate of second quarter growth from a 0.7% contraction to a fall of 0.5%.

Official GDP figures for the second quarter will be revised later today after better-than expected construction and industrial production figures.

UK retail sales have posted a surprise rise in July, up 0.3% from June, beating analysts' expectations of a more modest 0.1% increase.

The UK's unemployment rate fell in the second quarter of the year, from 8.2% to 8%, although the number of young jobseekers climbed over the period.

The Consumer Prices Index (CPI) rate of inflation climbed to 2.6% last month, from 2.4% in June.

Capital Economics expects the Bank of England to cut the UK's base rate from 0.5% in an effort to stimulate growth, after last week's GDP figure showed the economy is shrinking faster than feared.

The UK economy shrank by 0.7% in the second quarter of the year, a far worse contraction than economists had forecast, keeping the UK mired in recession.