Disappointing growth no surprise say business leaders

A STALLING in the growth of the UK economy is disappointing but not surprising, business leaders in the West Midlands have said.

Latest data from the Office for National Statistics shows the UK economy grew by just 0.1% between April and June, less than the 0.2% previously estimated.

The service sector fared little better, growing just 0.2% in the quarter, compared with previous estimates of 0.5%.

The figures suggest that while growth is taking place, the spectre of a double dip recession continues to loom on the horizon.

The business community is now waiting to see if predictions of a fresh wave of quantitative easing materialise when the Bank of England announces its latest decision on interest rates.

John Rider, West Midlands’ chairman of the Institute of Directors, said: “The GDP revisions are disappointing but not surprising – it reveals just how perilous the recovery was in the first half of the year, while the back data also shows the recession was deeper than previously thought.

“The risk of a contraction in output in the second half appears to be very high. Hopefully we can still avoid a slide back into recession, and I am confident West Midlands business has the determination to see things through, but it’s getting scary.

“More quantitative easing is on the way, the only question is how much. Nevertheless, if the euro-zone crisis intensifies a return to recession remains a real threat.”

Richard Halstead, Midlands region director at manufacturing lobby group EEF, said the figures were a mixed bag.

“On the one hand manufacturing has made up more lost ground on the back of a stronger recovery that first thought.  But, on the other, the data hardly paints an encouraging picture of growth in the wider economy with a deeper recession and the economy barely moving in the past three quarters,” he said.

“The rest of the data also paints a mixed picture. Alongside the building and consumer recessions the trade story is more downbeat.  But, separate business investment figures tell a story more aligned with the positive investment intentions recorded in private sector surveys.  

“As ever, though, the data only tells us what’s already happened in the past and with concerns mounting over economic prospects in key markets there are clear risks around growth and investment being sustained in the short-term.”