British factory output fell unexpectedly in June, an unwelcome reminder of the poor state of the country's economy as it faces new challenges from global financial turmoil and widespread riots in London and other cities.

The weak official data followed reports overnight from trade associations of low consumer confidence in the retail and property markets last month.

The Office for National Statistics said British industrial output contracted at its fastest pace since May 2009 in the three months to June.

A 0.4 per cent drop in factory output in June, and a failure of North Sea oil and gas output to get back on stream after maintenance in May, meant the broader industrial output measure fell even more than the ONS had assumed when it made initial calculations of second-quarter GDP last month.

Industrial output was 1.6 per cent lower than in the first quarter, compared to the initial 1.4 per cent fall the ONS had pencilled in. Economists estimated this would shave 0.03 percentage points off Britain's meagre 0.2 per cent second quarter growth rate.

June's fall in factory output is bad news for those - including the British government and the BoE - who hoped manufacturing would rapidly get back on track after several months of disruption to supply chains from Japan's tsunami and Britain's royal wedding.

The weak industrial production also pushed Britain's overall trade deficit for goods and services in June to its highest since December at £4.496 billion. Net oil imports were the highest in almost three years.

Reuters