Concern as economy slides back
THE UK has returned to recession with new figures showing the economy contracted in the first three months of 2012.
GDP shrank by 0.2%, according to the Office of National Statistics, following a 0.3% contraction in the economy at the end of 2011. Two consecutive quarters of negative GDP growth mean the UK economy is now considered to be in recession.
However, business groups have expressed concern about the way ONS figures on the economy are compiled and contrasted its view with a series of surveys which have suggested a modest upturn in activity.
Christian Spence, research manager at Greater Manchester Chamber of Commerce, said there was “little surprise” in the GDP’s figure.
“The chamber has now stated for some time its belief that the country is now in a low-growth environment and that both positive and negative quarters can be expected; this is no cause for panic.”
He added that the contraction had largely been driven by a 3% quarterly slump in the construction sector, and that certain sectors such as manufacturing were performing better at a local level than nationally.
“The chamber remains confident about the ability of its member businesses in Greater Manchester to continue to drive growth in the region, particularly as they continue to seek opportunities to market internationally, though we urge the Government to do more to support the delivery of its aim to rebalance the economy away from the capital.”
He added government spend for infrastructure projects since the last election had largely been focussed on the South East, and that schemes such as the Northern Hub and Atlantic Gateway should be given greater prominence.
“If the Government is keen to truly rebalance the economy and support the regions, we must see real and tangible action to support the wider domestic economy.”
Greater Manchester’s economic research body, New Economy, has produced its own data which attempts to argue that structural shifts in employment have meant that the current recession will be far less damaging than any of the previous six.
Mike Emmerich, chief executive of New Economy, said: “This is the first recession in 100 years that will not do long-term damage to Greater Manchester’s economy.
“With Greater Manchester leading the way in terms of measures to boost the economy, such as the £300 million investment fund to kick-start private sector projects and the recently announced City Deal, it is now vital that the momentum gained from schemes such as this is built on in order to support long-term sustainable growth.”
David Ost, North West region director at manufacturers’ trade body EEF said the GDP figure was “a concern”.
“However, the underlying health of individual sectors is particularly fuzzy at the moment, with a raft of surveys pointing to a modest improvement in manufacturing trading conditions in the first few months of the year.
“These figures are both a reminder of the big challenges facing the UK and world economies, and a confirmation of the patchy and unsteady recovery that had been expected.”
