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Show leadership to improve economy, govt urged
General News |
27/07/2012
In order to restore the UK economy to growth, the government needs to show greater leadership, it has been claimed.
John Longworth, director general of the British Chambers of Commerce (BCC), said ministers need to be more proactive in order to drive a recovery from recession.
He was commenting after the Office for National Statistics reported a 0.7 per cent fall in gross domestic product (GDP) between April and June.
Mr Longworth said this was not the news businesses wanted to hear, following the economy's return to recession during Q1 2012.
He suggested that many companies are faring better than official statistics suggest, but nonetheless it is imperative that the coalition takes action.
"It is clear that Britain is in the midst of the most prolonged period of stagnation it has faced in decades," Mr Longworth added.
"Many of our members are continuing with guarded optimism, but the government must ensure confidence is not damaged further."
He said ministers cannot expect firms to bust a gut to grow if they fail to take a long-term approach to creating an enterprise-friendly environment.
"We need a government that will pull the levers only it can reach to help companies export, invest, create new jobs and grow," Mr Longworth added.
"That means infrastructure investment, the creation of a state-backed business bank to lend to new and growing companies, and meaningful deregulation."
David Kern, chief economist at the BCC, claimed that the disappointing GDP figure paints "an unduly pessimistic picture" of the state of the economy.
"While the erratic construction figures were expected to show a large decline, the falls seen in services and in manufacturing are larger than anticipated," he stated.
However, Mr Kern said it is difficult to reconcile the very positive recent labour market figures published by the ONS, with the continued declines reported in GDP.
"Increases in employment, and in the average numbers of hours worked, at a time when output is falling, suggest implausible falls in productivity," he stated.
"We believe the employment figures are more accurate than the output figures, and the GDP figures are likely eventually to be revised up."
Posted by John Lynes
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