Last updated at 17:05, Friday, 03 August 2012

The chief executive of Cumbria Chamber of Commerce believes a state-backed business bank should be created to help get growth back into the economy.

Rob Johnston

Rob Johnston outlined some measures he felt were necessary to help get things moving after the latest GDP figure showed the UK was firmly in a double dip recession.

Mr Johnston said the creation of the bank – to help new and growing businesses – together with tax breaks for those taking on new staff and capital allowances to make it cheaper for businesses to buy equipment – were all measures which would have a “real impact on business confidence and growth.”

Mr Johnston said, however, that the preliminary GDP figure for the second quarter of 2012, published last week (w/c July 23), painted an “unduly pessimistic” picture of the state of the economy.

He said business surveys, including the British Chambers of Commerce national quarterly economic survey, showed a more positive picture and gave a more accurate indication of underlying trends in the economy.

“The GDP figure for quarter two isn’t what businesses wanted to hear and appear to put us firmly in a double dip recession, with now three successive quarters of negative growth,” he said. “The Office for National Statistics (ONS) figures show a much larger decline in GDP in the second quarter than we, and most analysts, expected – deepening the technical recession. We believe that the disappointing figure paints an unduly pessimistic picture of the state of the economy.”

He said construction figures were expected to show a large fall, but the ones reported in services and manufacturing were larger than anticipated.

“Added to this, it’s difficult to reconcile the very positive labour market figures published by ONS with the continued declines reported in GDP,” Mr Johnston said.

“Increases in employment and in the average numbers of hours worked, at a time when output is falling, suggest implausible falls in productivity.

“We believe the employment figures are more accurate than the output figures and that GDP figures are likely to be revised upwards at some point.”

He said ONS figures were often revised and it wouldn’t be the first time that quarterly ones were adjusted once statistics had been more fully assembled.

“That said, it’s clear that Britain is in the most prolonged period of economic stagnation for many years and economic growth remains far too low,” he added.

“It’s time for the Government to be bold, to act positively and show leadership.

“Although many of our members are continuing with guarded optimism, these latest figures will impact on business and consumer confidence – and the Government must ensure that confidence isn’t damaged further.”

He said support through the Regional Growth Fund had been slow to come through to businesses and they needed infrastructure investment, creation of the bank and tax breaks.

The second quarterly ONS figures were -0.7 per cent on the quarter and -0.8 per cent on the year.

First published at 14:09, Friday, 03 August 2012
Published by http://www.cumberlandnews.co.uk