Regional reaction to Q2 Growth Figures
Yesterday the Office of National Statistics released new figures confirming that economic growth slowed down in the last quarter.
While this news has prompted a range of reactions, the news that there was only 0.2% growth in the second quarter does not come as a surprise to anyone in the region.
The fragility of the economy is a significant worry for many in the North East, especially in the public sector, which plays a large role in the regions economic growth.
Andrew Sudgen, director of membership and policy at the NECC said: “The government has committed itself to rebalancing the economy, which means we need to have much faster growth in the North East than other parts of the country”
Manufacturing and exports industries in the region have grown, but it is unsustainable for only part of the economy to be responsible for ensuring overall growth.
Andrew added: “At the moment, while we have some firms in specific sectors doing very well there is not enough evidence of real active policy changes both nationally and locally to enable the rebalancing to happen.”
Pauline Osbourne FSB North East Regional Chairman, went even further, and called for the government to cut VAT to 5percent in tourism and construction to provide a boost to consumer and business confidence.
She said: “While Government plans to encourage export-led growth are necessary for long-term economic rebalancing, the Government badly needs to find ways to improve confidence and kick-start the recovery in the short-term.”
However, Graeme Leech, Chief Economist at the Institute of Directors is wary of making any rash decisions in light of this news.
“We’re not back in the recession but with numbers like these it might feel as though we are.
“But let’s be quite cleat, weak GDP growth does not mean that we should resort to plan B with fiscal policy. The overall money supply is flat at best and until it accelerates we can have no confidence in a sustained upturn.”