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GDP figures reinforce need to boost economic growth, says BCC

GDP figures reinforce need to boost economic growth, says BCC

 *   GDP in Q2 up 0.2% on the quarter, 0.7% on the year

 *   Manufacturing fell 0.3% on the quarter, but rose 2.3% on the year

 *   Services rose 0.5% on the quarter, 1.2% on the year

Commenting on the preliminary GDP figures for the second quarter of 2011 p ublished today by the ONS, David Kern, Chief Economist at the British Cham bers of Commerce (BCC), said:

"These figures were slightly worse than our forecast of 0.3 percent, but t hey reassure us that the UK recovery is still on course, and fears of a do uble dip recession are not justified. Special factors, such as the Royal W edding and temporary falls in oil and gas output, account for the weak gro wth in the second quarter.

"Based on these figures, we believe the government is right to persevere w ith its deficit cutting measures aimed at stabilising our public finances.  There is no need to consider changes in fiscal policy or talk about the n eed for a Plan B. However, we mustn't be complacent. Growth is weak and th is is due to both a lack of demand and inadequate supply potential.

"To sustain demand, we think the Bank of England should persevere with low  interest rates and consider an increase in the QE programme. We believe t hat increasing the productive potential of the economy is more important t o our economic success than simply boosting consumption. This means implem enting growth-enhancing policies and removing regulatory burdens that hamp er businesses in their efforts to create jobs and export."


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