GDP data 'shows cuts are not working'


There were fresh calls for the Government to scale back its austerity
measures today after figures confirmed the UK had returned to recession.

And it was claimed that the grim official figures could hit confidence and lead to more pain in coming months. Here are some of the latest comments from business leaders, economists and unions representatives.

Alan Clarke, an economist at Scotiabank, said: "With two consecutive quarters of contraction, this ticks the box of a technical recession. However, as recessions go, this is pretty shallow stuff.

"The recent appreciation in the effective sterling exchange rate and disappointment on GDP are likely to hold back the Bank of England's medium-term inflation projection. Given these, the door is back open to more quantitative easing."

TUC general secretary Brendan Barber said: "There has been no growth over the last year, and the economy is 0.5 per cent smaller than six months ago. Austerity isn't working.

"The Government should look across the Atlantic and follow President Obama's alternative that has reduced unemployment and brought growth back to the USA."

Dave Prentis, Unison general secretary, also said the Government should scale back its austerity measures to boost growth.

He said: "A bad month has got even worse for this Government - but it is hardworking families that are paying the real price.

"Every day that the coalition Government fails to act is another day that communities and hardworking families suffer unnecessarily."

Andrew Sissons, researcher at The Work Foundation, said: "The economy has been stagnant for almost two years and there are few signs that it is about to return to growth any time soon.

"However, the return to recession may further dent confidence among businesses and consumers, and may further weaken prospects for a speedy recovery."

Richard Driver, analyst for Caxton FX foreign exchange broker, said: "It is the same old story of the services sector propping up UK growth and the manufacturing and construction sectors failing to contribute, with the latter contracting by an awful 3 per cent in Q1.

"The light at the end of the tunnel is that the UK economy should pick up in the second half of the year, assuming the Olympics delivers the boost to growth that is expected."

David Kern, chief economist at the British Chambers of Commerce, said: "These figures are at odds with the experiences of many UK businesses which continue to operate with guarded optimism. We think it is likely that the preliminary estimate will be revised upwards when more information is available.

"While the Government must persevere with plans to reduce the deficit despite these figures, it must introduce more measures to empower businesses to drive recovery."

Neil Prothero, UK economist at the Economist Intelligence Unit, said: "Irrespective of whether revised figures show a slight rise or fall in GDP, the uncomfortable fact remains that the economy is in a desperately fragile state, despite unprecedented stimulus and financial support.

"We expect the economy to contract for a third successive quarter in April to June, and with the economic picture across Europe forecast to deteriorate further, our already below-consensus UK GDP forecast for 0.2 per cent growth in 2012 is already appearing a little bullish."

Graeme Leach, chief economist at the Institute of Directors, said: "Confidence has already taken a battering from the euro crisis and today's news means companies are less likely to boost investment and recruitment this year."

British Retail Consortium director general Stephen Robertson said: "2012 looks like being tougher than we thought. We won't see a convincing revival until real wage growth returns but last month's increase in inflation suggests the squeeze on disposable incomes will continue.

"If it's to rekindle recovery, the Government must deliver a credible growth strategy. It should halt its tsunami of destructive new regulations and taxes. They are adding costs to individuals and households and can only prolong this new recession."


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