By Maximilian Clarke
The UK's GDP grew by 0.5% over the third quarter of 2011, the Office for National Statistics predicted, lifted in particular by strengths in the services sector. Discussing the results in a broader economic context are economists business organisation representatives:
Graeme Leach, Chief Economist at the Institute of Directors, cautions that the economic situation is worsening and that Q4 GDP figure will be crucial, and could well see the UK economy return to negative growth:
“You can't see the road ahead from the rear-view mirror: today’s GDP figures are welcome news, but they fail to capture the dramatic events of recent weeks in the eurozone. GDP growth is almost certain to flatten off, or even fall, in the fourth quarter of this year due to postponed business investment and consumer caution, even if the eurozone crisis stabilises. Unfortunately we don't think the crisis is over, it will continue to haunt recovery prospects in the UK.”
Whilst welcoming the news, Jeremy Cook, Chief Economist at World First currency brokers, echoed Leach in predicting the final quarter estimate will likely be less positive as the global economic situation worsens:
“One figure that may get lost in all the GDP congratulations is news that the PMI for the UK manufacturing sector has fallen back below the crucial 50.0 level, which denotes expansion.
“These falls in manufacturing production, in combination with the impact of the European debt crisis, already mean that unfortunately the figure for Q4 is likely to be worse than Q3.”
Prominent trade union, Unite, dismissed the 0.5% growth and cautioned that the UK was heading back into recession, before repeating his calls for the government to adopt a Plan B for the economy, in which deficit reduction is placed behind more urgent issues of stimulating growth, via public spending"
”We should not be fooled by the superficial gloss that ministers will put on this paltry figure of 0.5 per cent," said the Uninon's Chief, Len McCluskey. "The British economy is still heading towards the rocks of a double-dip recession, unless George Osborne introduces a much-needed ‘Plan B’ rescue package.
”People are losing their jobs and those that have them feel insecure, so they are not going out to spend in the high street — the promised boost in private sector jobs to soak up the job losses in the public sector is an illusion masquerading as a truth. It is clear that more demand needs to be injected into the economy urgently.
”The savage cuts to the public sector will hit the local economies in cities and towns across the UK and, as a result, will cause more economic pain to families and communities.”
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