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Economy shrinks during final quarter of 2011
General News |
26/01/2012
Latest growth figures from the Office for National Statistics (ONS) reveal the UK may be sliding back into recession.
The economy contracted by 0.2 per cent during the fourth quarter of 2011, based upon the ONS' preliminary estimate for October to December.
This came after 0.6 per cent economic growth in the previous three-month period.
Should the economy contract further during the first quarter of 2012, the UK will have entered a double-dip recession.
David Kern, chief economist at the British Chambers of Commerce (BCC), said the first estimates for growth in the fourth quarter of 2011 were not only disappointing, but worse than many anticipated.
He commented that the UK economy is facing "difficult challenges", but said there is no need for undue pessimism.
"The latest forecast published by the International Monetary Fund showed a downward revision from other estimates," Mr Kern stated.
"But it also predicts that the UK economy will outperform not just the eurozone as a block, but major economies such as Germany and France."
As such, he called on the coalition government to persevere with its "important job" of cutting the deficit.
But Mr Kern added that the Q4 gross domestic product (GDP) figures reinforce the need to reallocate priorities within the overall spending envelope to growth-enhancing policies.
"Reducing red tape, cancelling the planned increase in business rates, providing more support for exporters, and implementing an effective credit-easing programme as soon as possible, will help businesses to grow," he claimed
John Cridland, director-general at the Confederation of British Industry (CBI), said the economic environment became even more challenging late last year as heightened concerns around the crisis in the Euro area eroded business confidence.
He noted that this is likely to have contributed to the fall in GDP.
"There is still great uncertainty around the economic outlook and a shallow recession cannot be ruled out. However recent survey evidence has been a little more encouraging," Mr Cridland added.
Posted by John Lynes
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