UK double-dip recession longest on record
By PRW Staff
Posted 25 July 2012
The latest economic data for the UK is worse than expected, taking many commentators by surprise. Data for the second quarter shows that the economy shrank by 0.7%, whereas economists had been expecting a 0.2% dip.
“These are very disappointing figures. They show there has been a lack of growth in the first half of 2012,” said CBI director-general John Cridland.
“When I talk to businesses on the ground, however, the overwhelming view is that right now the economy is flat rather than negative, and there is potential for Britain to get back into growth later in the year.”
“The cuts to public investment programmes have not been met by an upsurge in investment from the private sector. Some of the measures announced recently, such as railway projects, are to be welcomed, but what about road building?”
Philip Law, BPF
The UK economy has contracted for three consecutive quarters and is now smaller than when the government took office in 2010. Construction output fell 5.2%, industrial production fell 1.3% while service sector output slipped back just 0.1%.
The poor performance from construction drew express concern from the British Plastics Federation (BPF).
“Construction is more dependent on the state of the local economy than those other sectors which can benefit from export potential,” said the BPF's public and industrial affairs director, Philip Law.
“Whatever happens in the UK, construction firms and their suppliers are usually 100% exposed to it. Some companies have done deals overseas for infrastructure projects, but these are small compared with the scale of their involvement closer to home.
“There is a link [between these figures] to the government's measures to deal with economic deficit. The cuts to public investment programmes have not been met by an upsurge in investment from the private sector. Some of the measures announced recently, such as railway projects, are to be welcomed, but what about road building?
“A lot of the projects already announced have quite long lead times so it will be a while before they pull through and increase demand for plastics companies supplying into the construction sector,” Law continued.
“The government should look at measures to boost house building, which as well as benefitting our members can act as the locomotive of the economy – sales of homewares, white goods, etc.”
The chancellor, George Osborne, said in a statement: “We all know the country has deep-rooted economic problems and these disappointing figures confirm that. We’re dealing with our debts at home and the debt crisis abroad.”
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