The UK has taken one step towards recession, and could be on the brink of taking another.
That’s the pessimistic assessment of Institute of Directors South West chairman Gerry Jones, following the latest GDP figures released today, which show a 0.2% decline in Q4 2011.
He said: “The tightrope walk between recession and recovery continues. We’ve taken one step towards a double-dip recession, and it’s now probably 50-50 as to whether we’ll take the second, with a fall in output this quarter as well.
“It’s important to stress that the 0.2% fall in GDP is not large and could be reversed as QE2 works through the economy. But even if output does increase in Q1 we’ll continue to experience the feel-bad jobless recovery for some time yet. Indeed, the combination of falling output and today’s MPC minutes suggest QE2 could be further expanded in February.
“The tipping point for recession or recovery remains economic developments in the eurozone. If the euro crisis gets worse, sustaining UK recovery looks almost impossible.”
Paul Spencer, regional director for Lloyds TSB Commercial in the south and west, is slightly more upbeat. He said: “Small businesses were reporting slower growth in the last quarter of 2011, so this contraction in GDP is not unexpected.
“However, our most recent figures, from December’s Purchasing Manager’s Index, show that there was a slight upturn in business activity at the very end of last year.
“Clearly economic conditions remain challenging, but there is strong evidence that some businesses are more worried about the economy than is justified by their own performance.”
“The reality is that there are still opportunities open to small and medium sized enterprises, not least those connected to London 2012 and through resilient export markets. If the economy is to recover, and if confidence is to be restored, these are opportunities that businesses must grasp quickly.”