East Anglia: Business groups call for action to boost growth, despite UK avoiding ‘triple dip’ recession

Denise Rossiter, chief executive of Essex Chambers of Commerce

Denise Rossiter, chief executive of Essex Chambers of Commerce - Credit: Archant

BUSINESS leaders warned today that the Government must do more to boost the manufacturing and construction sectors, despite data showing that the UK economy has avoided slipping into a triple-dip recession.

Figures from the Office for National Statistics (ONS) indicated that the economy grew by a better-than-expected 0.3% during the first three months of 2013, so averting a technical recession – defined as two consecutive quarters of falling output – following a 0.3% decline in the final quarter of last year.

A consensus of forecasts by economists had pointed to growth of just 0.1% for the January-March period, indicating a risk of theUK slipping into recession for a third time since the financial crisis of 2008.

The increase of 0.3% announced by the ONS today reflected a strong showing from the services sector which grew by 0.6%.

However, production and manufacturing edged ahead by a more modest 0.2% and construction activity plunged by 2.5%, with the wintry weather of January and March adding to the sector’s problems.

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And, with the overall increase of 0.3% being subject to revision as more data comes in, business groups said Ministers still needed to take action to bring about a more sustained recovery.

“The fact that the UK economy avoided negative growth is encouraging and will boost confidence,” said John Dugmore, chief executive of Suffolk Chamber of Commerce.

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However, he added: “While the Government could claim this as a minor win, it means little when looking at the bigger economic picture. Growth is still unacceptably weak, and will remain so without radical measures to get the economy moving.

“These latest economic figures show that more must be done to support construction, which is why chambers across the UK have consistently advocated more house building and immediate action to improve our roads – including the A14.

“While we still believe that the Government should stick to its current fiscal reduction plan, there is a need for a more promising growth strategy,” Mr Dugmore continued.

“The Government must consider a significant shift in priorities to boost growth within the existing spending envelope, by allocating more current spending towards capital investment over the next few years.”

Denise Rossiter, chief executive of Essex Chambers of Commerce, said: “The economy returning to positive growth is not surprising, but welcome nonetheless.

“We have repeatedly said that talk of a new recession is unwarranted, and our recent quarterly survey also signalled that the economy was in positive territory in the first quarter of this year.

“The figures also highlight the disparity between growth in the service sector and continued falls in manufacturing and construction in particular, which remain under pressure.

“While services output is now above its pre-recession levels from 2008, both construction and manufacturing are still lower.”

John Cridland, director-general of the CBI, said: “This is a welcome uptick which confirms our view that 2013 will see real growth. The broad-based pick-up in the services sector is an encouraging basis for further organic growth.

“What Britain’s economy now needs to see in the coming months is a recovery in manufacturing output, helped by a brighter global outlook.

“The Government must build on these emerging signs of confidence by getting behind Britain’s entrepreneurs and exporters.”

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