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22 December 2011

New GDP figures reinforce need for growth enhancing policies

• Quarterly GDP growth in Q3 2011 revised up from 0.5% to 0.6%; year on year growth unchanged at 0.5%

Commenting on the revised GDP figures for the third quarter of 2011, David Kern, Chief Economist of the British Chambers of Commerce (BCC), said:

“The headline GDP figure came as a pleasant surprise, with the quarterly growth in Q3 revised up from 0.5% to 0.6%. But the year on year growth is still very weak at 0.5%, and highlights the difficult challenges facing the economy. The service sector was the main driver in Q3 with growth revised up from 0.6% to 0.7%. Manufacturing growth was minimal and revised down, and exports are still showing negative growth on the quarter. It is especially disappointing that the current account deficit in the third quarter rose to its highest level on record.

“Despite these disappointing features, investment spending is up on the quarter. UK growth is in positive territory and we have performed better than the eurozone in the third quarter of the year. There is only limited data so far for the fourth quarter, but we believe the UK will record minimal positive growth, slightly better than the small decline predicted by the OBR.

“While it is right for the government to persevere with measures to reduce the deficit, priorities within the overall spending envelope should be reallocated to help businesses create jobs and drive the recovery. The positive messages in the Chancellor’s Autumn Statement must now be translated into firm action. An effective credit-easing programme should be implemented as quickly as possible, along with measures to reduce red tape, cut business rates and support exporters.”