BCC: Mediocre GDP figures highlight need to nurture fragile recovery
Commenting on the GDP preliminary estimate for Q1 2011, published today by the Office of National Statistics (ONS), David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“These figures were mixed and well below the OBR prediction that the economy would grow by 0.8% in the quarter. On the basis of these figures, we reiterate our forecast that in 2011 as a whole GDP is likely to grow by 1.4%, much lower than the OBR’s expectation of a 1.7% increase. There are some positive features in these figures, particularly the 1.1% growth in manufacturing and the 0.9% increase in services. But construction fell sharply for a second quarter in a row and the economy’s overall performance is still mediocre. Total economic activity has only just returned to the levels seen in the third quarter of 2010.
“Given the fragility of the recovery, it is vital for the Government to persevere with policies that support growth, and remove the obstacles that prevent businesses from creating jobs and exporting. For the MPC, these figures reinforce the case for postponing increases in interest rates until much later in the year. It is crucial to avoid any measures that could derail the recovery.”