NORTH-EAST business leaders last night warned against “excessive doom-mongering” despite lower than expected growth figures increasing fears the nation was slipping towards a triple-dip recession.
Chancellor George Osborne was yesterday accused by Labour of being “asleep at the wheel” after a fourth quarter 0.3 per cent decline in gross domestic product (GDP) prompted renewed criticism of his austerity programme.
The North East Chamber of Commerce (NECC), which represents more than 4,000 businesses in the region, said the Government had tough questions to answer on how it was supporting businesses given the pattern of stop-start growth.
Loading article content
But NECC policy director Ross Smith said there were still reasons to be optimistic despite the gloomy economic outlook.
“Our surveys have shown that underlying confidence in the private sector is gradually building, with employment and investment plans increasing among NECC members.
“It’s therefore important that the estimates don’t prompt a wave of excessive doom-mongering which could nip that confidence in the bud.”
Andrew Hebden, CBI North-East assistant regional director, said that while the figures were disappointing, the negative mindset that the figures could create was more of a concern.
“There is a danger that people will get too hung up on there being a triple dip recession and the impact that can have in terms of confidence when the North-East economy is broadly doing okay.”
Labour MP for Middlesbrough South and East Cleveland Tom Blenkinsop said the GDP statistics failed to depict the real human cost of what was happening for many people in the region.
“They don’t tell the stories of young people unable to find their first job, families struggling to pay the bills at the end of the month and pensioners unable to keep their homes warm.”
The worse-than-expected figures provided fresh fuel for the unions who have repeatedly argued that the Government had cut too deep, too soon.
They leapt on comments by Deputy Prime Minister Nick Clegg, who appeared to admit that the Coalition had cut spending too deeply when it took power.
Kevin Rowan, regional secretary of the Northern TUC, said: “Our stalled growth is in no small part due to those missed opportunities and slash and burn approach. The TUC strongly urges the Chancellor to recognise we need a different direction in economic policy.”
Shadow chancellor Ed Balls said now was the time for a “plan B” to support growth through VAT cuts and spending on infrastructure.
Chancellor George Osborne said the figures were a reminder that the UK faces "a very difficult economic situation".
He described them as "a reminder that last year was particularly difficult, that we face problems at home with the debts built up over many years, and problems abroad with the Eurozone, where we export many of our products, deep in recession”.
Experts said one of the reasons behind the decline in GDP was a slump in North Sea oil production.
The importance of oil and gas to the UK economy could not be underestimated, said George Rafferty, chief executive of NOF Energy, a Durham-based business support organisation with 420 members in the energy supply chain.
He added: “Investing in oil and gas operations has never been more vital and operators are looking to the UK’s supply chain to provide effective technology and skill-based solutions that can maintain productive output.”