Commenting on the revised GDP figure for the first quarter of 2012, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“While the GDP figure for Q1 2012 remains at -0.3%, the year-on-year figure has been revised down to -0.2%. There are still unresolved questions about the ONS estimate, but regardless of that it is clear that the UK economy faces major challenges, and growth is inadequate. The effect of the austerity plan, combined with ongoing problems in the eurozone, suggests that businesses will have to cope with a prolonged period of weak growth. Early indicators for the second quarter of the year show that the ONS may announce another quarter of negative growth, making it the third in a row. Given these difficult circumstances, every effort must be made to ensure that business confidence does not suffer unnecessarily.
“It is likely that the Monetary Policy Committee will announce a further increase to Quantitative Easing next week. Though this is understandable given the risks that the problems in the eurozone pose for the UK’s financial system, higher QE on its own will not be enough to revive growth. More radical measures such as a state-backed business bank, and investment in infrastructure are needed. The government must also look to quickly implement the lending and liquidity schemes announced recently.”