REGIONAL business leaders are calling on the Bank of England to inject more cash into the economy, after it was revealed the UK’s recovery had virtually ground to a halt.
Official figures from the Office for National Statistics showed that gross domestic product (GDP) grew 0.1% in the second quarter, downwardly revised from previous estimates of 0.2%.
The near-stagnant growth was driven by a 0.8% drop in consumer spending, the biggest drop in more than two years.
The ONS data means the country was in a much worse position at the start of the recovery than previously assumed, as the 2008-09 recession was much deeper than originally feared.
The troubling data will pile pressure on the Bank of England and will raise questions about whether it should roll out further emergency measures to jump-start the flagging recovery.
Some economists warned a renewed recession was now more likely, but the Treasury said it would not alter its deficit-busting austerity measures despite the bleaker picture.
Regional business leaders last night called on the Bank of England’s Monetary Policy Committee (MPC) to increase its £200bn quantitative easing programme – effectively printing money – to stimulate UK growth.
Liverpool Chamber of Commerce chief executive Jack Stopforth told LDP Business: “These figures support our view that the Government must persevere with its deficit-cutting plan.
“However, it must be more active in pursuing growth-enhancing policies, such as reallocating priorities within the total spending envelope.
“On its part, the MPC must increase quantitative easing and think about adopting other radical measures aimed at supporting the recovery.”
Darrell Matthews, regional director of the Institute of Directors North West, backed Mr Stopforth’s call for more QE.
He added: “The GDP revisions make a very strong case to launch QE2. Firstly because they show just how perilous the recovery was in the first half of 2011, and secondly because the data also shows the recession was deeper than previously thought.”
