MORE gloom yesterday as figures for the second quarter of this year showed the UK economy grew by just 0.2%.

This is a drop from the 0.5% seen in the first quarter.

The Office for National Statistics says the lower figure was influenced by one-off factors such as the royal wedding, Olympic ticket sales, record warm weather in April and the Japanese tsunami.

The ONS estimated the impact of these effects knocked as much as 0.5% off the GDP figure, which otherwise may have shown growth of 0.7%.

Even so, it is sluggish at best and the UK economy seems to be avoiding a double-dip recession by the skin of its teeth.

Yesterday, Chancellor George Osborne remained firm in his stance that the priority for the country was to reduce its deficit.

Critics say this lacklustre growth could affect tax revenues targets.

The Government’s tax and spending watchdog had projected 0.4% for the second quarter, but many City economists reduced their GDP forecasts recently because of mixed manufacturing, services and construction figures.

While GDP remains in positive territory, albeit only just, Osborne is probably right to keep faith in his austerity measures. With the global ratings agencies issuing warnings to eurozone countries, and even the US, about the possibility of reducing credit ratings, now is not the time to show weakness.

However, we remain at the mercy of forces outside of our control.

The sovereign debt crisis that has so badly affected Greece and Ireland and is threatening to spread to Italy and Portugal, could yet pose huge problems.

British banks’ exposure to Greek debt is relatively small – just over £2bn – but that figure goes into the tens of billions when the likes of Italy come into the equation.

If the default contagion does spread then the UK Government could be forced to bail out the banks all over again.

Such a scenario would spell big trouble for our fragile economy.

Small businesses and would-be housebuyers are already complaining about how difficult it is to get money out of the banks. If there was a further tightening of lending then a second recession would surely follow.

That would really be a test of Mr Osborne’s resolve.