Britain's bosses tell the ONS: it's bad, but not a recession

Corporate leaders fear GDP data will panic consumers while CBI suggests manufacturing remains robust

Business leaders cast doubt on yesterday's gloomy GDP figures, arguing that the slump they suggested was not only at odds with their experience but also threatened Britain's fragile economic confidence.

Click HERE to view graphic

Meanwhile, upbeat figures from the CBI on the manufacturing industry made the official numbers look even more overly pessimistic.

Sir Martin Sorrell, chief executive of WPP, the world's biggest advertising agency, told The Independent that clients had not cut their marketing spend. "The UK is ok for us," he said, although he admitted there was some evidence of money being pushed to the second and third quarters because of the Olympics and Euro 2012 football tournament.

But it was builders and engineers who appeared most dubious about the Office for National Statistics' claims of a 3 per cent contraction in construction.

Mark Clare, chief executive of the housebuilder Barratt, declared: "There is no doubt that the housing industry has seen greater stability in the current market conditions. Barratt has been opening new sites on newly acquired land which have been selling well with strong customer demand."

Gordon Payne, managing director of Teesside's Darchem Engineering, added: "We've seen substantial growth of between 10 and 15 per cent in the first quarter, much of it driven by exports. We need to expand our production facilities." Peter Duncan, managing director of Cressall Resistors, a maker of industrial power resistors, in Leicester, added: "We had a very good first quarter. The overall trend is still very positive."

Sian Sutherland, the entrepreneur behind the Mama Mio beauty brand, who numbers Selfridges, John Lewis and other department stores as clients, said: "Although our US growth is better than in the UK, we are still seeing good increases in our sales over here."

Industry groups lined up to question the initial estimate from the Office for National Statistics (ONS) that the economy contracted by 0.2 per cent in the first quarter. David Kern, chief economist of the British Chambers of Commerce, declared thefigures "unduly pessimistic," adding: "Many commentators will question the accuracy of the data." He pointed out that this first estimate of GDP is based on only 40 per cent of total transactions, leaving a wide scope for error. Yesterday's initial GDP estimate will be revised twice in the coming months before it is finalised.

Ian McCafferty, the CBI's chief economic adviser, cast particular doubt on the services sector estimate of just 0.1 per cent growth.

He worried that headlines about recession could hit consumer spending. "Clearly there is a risk, given that confidence is fragile, that this could hit it further," he said.

The retailer Theo Paphitis added: "Let's not talk ourselves down."

The CBI's survey yesterday showed an increase in orders and output from industrialists. Some 8 per cent more companies reported an increase in orders in the first quarter, than a decrease – giving a so-called balance of plus 8. Furthermore, British manufacturers are expecting the strongest improvement in orders in 12 years over the next three months. A balance of plus 24 expect orders to increase in the next three months, the highest reading since April 1997.

Although many companies did not recognise the GDP figure, there were also others that did. Marc Mendoza, chief executive of the ad buying agency MPG Media Contacts, said some clients were delaying decisions about marketing campaigns. "We haven't seen a market as 'late' as this for a very long time. There is no visibility."

The ONS's chief economist, Joe Grice, said the report was based on a survey of 8,000 companies and had been rigorously compiled.

View from the front line: Tycoons talk

Ad man

Sir Martin Sorrell, WPP

'The UK is OK. Some companies are deferring spending because of the Olympics'

Make-up mogul

Sian Sutherland, Mama Mio

'Our US growth is better than in the UK, but we're still seeing good growth here'

Airport boss

Jose Leo, BAA

'The GDP figures show how much we need to to be connected to emerging nations like Brazil, Russia, India and China'

Retail chief

Theo Paphitis, entrepreneur

'This is no different to where we've been since 2009. Let's not talk ourselves down'

Big builder

Mark Clare, Barratt CEO

'We're opening new sites and properties are selling well. The market's stabilising'

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