By Marcus Leach
John Longworth, Director General of the British Chambers of Commerce (BCC), has said that today's (Friday) GDP figures could harm business confidence.
The official figures gave fresh concern to fears of a triple dip recession, as they showed that the UK's economy contracted by 0.3% in the final quarter of 2012.
The Office for National Statistics' data shows that output shrank following 1% growth in the third quarter, although this was considered to be artificially skewed by the Olympics.
And Longworth fears that the latest data could dent business confidence.
“It is of course concerning that the preliminary GDP estimate revealed the UK economy shrank in the final quarter of 2012," he said.
"Despite the weak figures, our own research shows that firms across Britain are still confident they can drive growth in 2013, highlighting the determination of UK businesses.
“What is clear is that British businesses need politicians to do everything they can to kick-start growth. Business wants to see bold and far reaching measures to drive growth and enable British firms to go head-to-head with their competitors overseas.
"Recent steps to improve access to finance, such as the commitment to create a business bank, must be implemented at scale and with a clear timetable. More forceful measures are also needed to unlock massive private funding to renew Britain's infrastructure. These measures will help create confidence, jobs and ultimately growth in the UK economy.”
David Kern, Chief Economist at the British Chambers of Commerce (BCC), added: “The disappointing GDP figures could lead to renewed talk of a triple-dip recession, which could damage confidence. However, it is important to put this in perspective. The ONS figures for the third quarter were inflated by ticket sales for the Olympics, and this creates a downward distortion for the fourth quarter.
"The overall economic situation remains one of stagnation, which is clearly disappointing and needs to be remedied, but does not justify talk of recession. The figures show that the economy was flat in 2012, but if you exclude the effect of oil and gas, there has in fact been a small growth in GDP over the past year. Construction remains by far the weakest sector in the economy, with a year on year fall of 11%, which highlights the urgency of strengthening housebuilding and other infrastructure spending.
“Every effort must be made to minimize any harmful effect these figures may have on business confidence. We know from our own research that business confidence is still relatively strong, and though firms are adjusting to the reality of lower growth prospects, they are determined to do what they can to drive growth. To maintain credibility, the government must persevere with spending cuts in key areas, but be prepared to do more to support exports and investment to improve the supply potential of the economy.”
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