Economy Shrinks

Date published: 26 January 2012

Economic activity shrank by 0.2% in the last three months of 2011, according to the latest GDP figures.

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: “ The figure of -0.2% for Q4 2011 GDP growth is disappointing, but not wholly unexpected and means we have heightened concerns that the decline may continue in the first quarter. We are, as we have been saying for over a year, still in a tough, low-growth environment and will remain so for some time, and much of the growth that will be achieved will be jobless growth as businesses use their resources more efficiently to address tightening margins.

“Driven by sharp contractions in both the production and construction sectors, it is unlikely that even the strong consumer demand in the service sector during the run-up to Christmas will allow for any later upward revisions into flat or positive territory. There are, however, sectors of the economy and areas of the country that are doing better than others and which have real opportunities for growth.

“The Government appears to understand that without demand any significant chance of recovery will be weak at best but, despite a number of good initiatives which could bear fruit being announced over the past 18 months, very few have yet produced any direct activity. In a volatile economic time, confidence is all and business will not invest without the security of a firm government lead and this has not yet appeared.

“We now need government to show with real action that it has grasped the significance of supporting regional domestic growth through infrastructure investment: in the North projects such as Network Rail’s Northern Hub would deliver a considerable return on investment. This would set the conditions for longer term business confidence, investment and job creation. Whilst the possibility of a double dip recession is by no means certain, at this stage there is probably little that can be done to now dramatically influence this quarter 's outcome.

"We do, however, urge the Government and Bank of England to act faster on plans outlined in the Autumn Statement and to look again at really getting behind regional infrastructure plans. As a whole Greater Manchester continues to see growth but, set against a far weaker North West picture and near term deterioration in demand, more should have been done sooner.”