FEARS that Britain is heading for an unprecedented triple-dip recession are mounting after official estimates revealed the economy shrank by 0.3 per cent at the end of last year.
The fourth quarter decline in gross domestic product (GDP) marks a sharp reversal of the 0.9 per cent rebound seen in the previous three months. The economy flatlined in 2012 as a whole and is now not expected to regain its peak level for another two years.
Labour accused Chancellor George Osborne of being “asleep at the wheel” amid increasing criticism of his austerity programme. Britain faces the threat of losing its coveted AAA rating after all three major ratings agencies put the country on negative outlook.
Mr Osborne insisted he would not “run away” from the problems facing the UK economy, but he is under pressure to do more to support growth in his upcoming March budget.
He said: “We have a reminder today that Britain faces a very difficult economic situation.
“A reminder that last year was particularly difficult, that we face problems at home because of the debts built up over many years and problems abroad with the eurozone, where we export most of our products, in recession.
“Now, we can either run away from those problems or we can confront them and I am determined to confront them so that we can go on creating jobs for the people of this country.”
Experts fear the fourth quarter decline has put the UK on course for the first triple dip since official records began.
Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said last week’s snow “rings alarm bells” for the economy. GDP suffered contractions at the start of 2012 and end of 2010 during snow disruption.
“Hopefully the fact that the disruption has come early in the quarter, in contrast to previous episodes, means there is more scope to catch up this time around. But the chances of another negative quarter – and a technical recession – are relatively high,” added Mr Goodwin.
Shadow chancellor Ed Balls warned that now was the time for a “Plan B” to support growth through VAT cuts and spending on infrastructure.
However, Kenton Robbins, regional director for Yorkshire at the Institute of Directors, said: “The figures are not as bad as they first appear, given that the third quarter of 2012 included the Olympic dividend.”
“There are a lot of initiatives to help finance, fund and encourage growth in business but many have a poor take up, because of a lack of marketing, or understanding, on the part of the business community about what they are for.
“We need to look within our own region and understand which sectors we can focus on to help stimulate growth and wealth. Yorkshire IoD will continue to help stimulate, encourage and promote the region’s business. We are particularly committed to manufacturing after it had such a tough year in 2012.”
In Bradford, shoppers, students and shop workers said yesterday’s gloomy figures did not surprise them, and did nothing to lift their pessimism about the outlook for the economy. Student Sarah Chesters, 19, said: “Lots of shops have closed down and we just think there’s nothing around the corner to make you feel better about being here.”
Business leaders were determined to press home a more optimistic message, predicting better times for the city. Mike Cartwright, policy executive at Bradford Chamber of Commerce, said a quarterly survey conducted by the chamber showed an upturn in confidence, despite the fact around 15 per cent of city centre shops are lying empty.
Question of Day: Page 16.