Member Article

GDP figures: the views

Following the news that UK GDP shrank by 0.3%, here’s what some key commentators had to say.

Graeme Leach, Chief Economist at the Institute of Directors, suggested we should “hold back on the doom and gloom.“

He said: “You can’t see the road ahead through the rear view mirror. The GDP fall was largely attributable to the unwinding of the Olympic effect and so the underlying story is that output is flat.

“The critical factor is not what the GDP figures did in Q4 but what the broad money supply figures will do in Q1. If the recent slight pickup in money supply growth can be sustained, the UK economic outlook in 2013 will be better than people expect. So hold back on the doom and gloom.”

Phil Orford, chief executive of the Forum of Private Business, said that while these figures are unwelcome, he is optimistic of better to come this year.

He said: “It is a difficult time for many businesses operating when an economy isn’t growing, and clearly there will be some continuing tough economic times in the first half of 2013.

“Whilst it is disappointing to see an estimate -0.3 contraction in the economy these are preliminary figures and we will hold judgement until the fuller figures come out.

“In the meantime the positive news is that unemployment continues to fall and the Government has a number of business friendly projects that can be sped up, including planning law changes and infrastructure spending. Despite this bad news we feel confidence is growing among small business owners.”

CBI director general, John Cridland, said the figures were a disappointing note to have ended the year on.

He said: “We think growth will continue to be fairly flat through the winter but momentum will gradually build later in the year, as the global economy picks up a little and confidence lifts.”

TUC general secretary, Frances O’Grady, was critical of the Chancellor’’s austerity plan and called for a change of course.

She said: “Today’s figures confirm our worst fears that the Chancellor’s austerity plan has pushed the UK economy to the brink of an unprecedented triple-dip recession.

“We are now mid-way through the coalition’s term of office and its economic strategy has been a complete disaster. The economy has grown by just one percent, real wages have fallen, and the manufacturing and construction sectors have shrunk. We remain as dependent on the City as we did before the financial crash.

“The Chancellor now has all the evidence he needs to change course and focus instead on investment and growth. If he refuses to listen he could do even more permanent damage to the economy.”

Kevin Rowan, regioal secretary of the Northern TUC said cuts to public spending “choke“ the economic recovery, and called on the Chancellor to revise the direction in his March Budget.

He said: “The Deputy Prime Minister is now among those who recognise that his government made serious errors in turning off the tap to important infrastructure developments when it came to power.

“Thousands of working people in the region’s construction industry have paid the price for that failure while thousands more are facing very tough choices in an effort to make ends meet. Our stalled growth is in no small part due to those missed opportunities and slash and burn approach. The TUC strongly urges the Chancellor to recognise we need a different direction in economic policy.”

Commenting on the implications for the retail sector, Peter Saville of advisory and restructuring firm Zolfo Cooper, also wanted to remain positive.

He said: “The economy may be weak, but all is not lost for the UK high street. Despite inflation and interest rates impacting consumer spending, the recent retail causalities tell us that responding to customer behaviour patterns is critical to surviving on the high street.

“Some retailers, such as John Lewis and Asos, reported strong sales over the Christmas period proving that those who keep up with the latest shopping habits – such as online, click and collect and showrooming – will be well placed to ride out the triple dip rollercoaster.”

This was posted in Bdaily's Members' News section by Tom Keighley .