Commenting on figures for the second quarter of 2011 published today by the ONS, David Kern, chief economist at the British Chambers of Commerce (BCC), said: "These figures were slightly worse than our forecast of 0.3%, but they reassure us that the UK recovery is still on course, and fears of a double dip recession are not justified. Special factors, such as the Royal Wedding and temporary falls in oil and gas output, account for the weak growth in the second quarter.
"Based on these figures, we believe the Government is right to persevere with its deficit-cutting measures aimed at stabilising our public finances. There is no need to consider changes in fiscal policy or talk about the need for a Plan B. However, we mustn't be complacent. Growth is weak and this is due to both a lack of demand and inadequate supply potential.
"To sustain demand, we think the Bank of England should persevere with low interest rates and consider an increase in the quantitative easing programme. We believe that increasing the productive potential of the economy is more important to our economic success than simply boosting consumption. This means implementing growth-enhancing policies and removing regulatory burdens that hamper businesses in their efforts to create jobs and export."
Andrew Sissons, researcher at The Work Foundation, added: "Today's figures confirm the long-standing suspicion that the economic recovery is struggling to gain momentum. While it appears that the Japanese tsunami and the Royal Wedding dampened growth, the fact remains that the economy is still performing poorly. The widely heralded export-led boom in manufacturing appears to have fallen away, and Britain's severe trade deficit is continuing to act as a major drain on the economy. There is some good news however, in that knowledge-intensive services remain the best hope for driving a future recovery, as emphasised by their steady growth over the past quarter.
"These results will have serious consequences for the labour market. Over the past year, the economy has created over 300,000 jobs without any significant growth in output. This jobs recovery is very unlikely to be sustained without much stronger GDP growth over the coming months. Productivity per worker is not growing significantly and that will continue to squeeze living standards.
"The lack of growth in the economy reiterates the need for government to put in place a more ambitious and credible long-term plan for growth. This plan must be focused on supporting innovation and investment in Britain, rather than cutting corporation taxes and hoping for the best."
