By Matthew Barrett
Follow Matthew on Twitter.
Pasted below are some reactions to the GDP growth figures announced this morning. Updated at bottom.
Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“It is not surprising that the latest economic growth figures are grim given the headwinds from the Eurozone. However, this should not tempt the government to change track on deficit reduction. There is no evidence that increasing government borrowing will increase economic growth. Indeed, if anything, part of the setback in growth has been caused by the necessary reversal of the irresponsible government borrowing in the immediate post-crash period. Whilst the government cannot solve the Eurozone crisis, it can radically deregulate the UK economy to create the best possible conditions for economic growth. The government must press ahead with planning reform and begin to deregulate the British labour market. In this area, the government has been moving in precisely the wrong direction and it must change course.”
Tony Dolphin, Senior Economist and Associate Director for Economic Policy at the Institute for Public Policy Research, wrote on LeftFootForward:
"In the short term, as I have been warning for some time, things are unlikely to get much better.There is some good news: energy firms are bringing down their charges and petrol prices have fallen. This will ease the squeeze on households’ spending power. But, as the IMF warned only yesterday, when it revised its forecast for growth in the euro zone in 2012 down from +1.1 per cent to -0.5 per cent, the euro zone crisis is an increasing threat to the global economy. Meanwhile, the government is sticking stubbornly to its deficit reduction plans, meaning further cuts in public sector jobs and taking more demand out of the economy. With public sector austerity at home and a potential crisis in the euro zone on their doorstep, it seems unlikely the private sector will step up its recruitment or investment plans any time soon. Together, these GDP figures and the short term outlook suggest the UK economy has slipped back into recession. The feared ‘double-dip’ began in the final quarter of 2011."
Sam Bowman, Head of Research at the Adam Smith Institute, commented:
"Another quarter, another set of atrocious growth figures. These results are no surprise, with the government taxing nearly 40% of the country's national income, especially wealth-producing corporations and workers. Thousands of pages of unnecessary regulation are holding back existing businesses and deterring entrepreneurs from setting up new ones. Strong economic growth is possible, but in this difficult global environment it will have to come from the bottom up. Britain's small and medium businesses need to be freed of the tyranny of regulation: they need the government to abolish employers' national insurance contributions, simplify health and safety rules, scale back employment tribunal rights and cut taxes across the board. Only the private sector can create jobs and economic growth. The government's growth strategy should be to get out of the way."
Dr Eamonn Butler, Director of the Institute, added:
“The figures show that the UK economy continues to flatline. We need more growth if we are to boost incomes and pay off our mountain of debt. The government has been far too slow in delivering its 'growth agenda'. We need lower taxes on business, and a huge pruning of regulation on small businesses in particular, to get people investing and hiring again.”
David Kern, Chief Economist at the British Chambers of Commerce, said:
“The UK economy is facing difficult challenges, but there is no need for undue pessimism. The latest forecast published by the IMF showed a downward revision from other estimates. But it also predicts that the UK economy will outperform not just the Eurozone as a block, but major economies such as Germany and France. The government must persevere with its important job of cutting the deficit. But the Q4 GDP figures reinforce the need to reallocate priorities within the overall spending envelope to growth-enhancing policies. Reducing red tape, cancelling the planned increase in business rates, providing more support for exporters, and implementing an effective credit-easing programme as soon as possible, will help businesses to grow.”
6pm Update: Tim Knox, Director, and Ryan Bourne, Head of Economic Research, of the Centre for Policy Studies, said:
“…we need to start making our tax system competitive again. The Coalition has taken steps on corporation tax – but it must be bolder in attracting inward investment, and should consider lowering capital gains tax again to stimulate capital investment. The contraction in GDP in Q4 2011 and the ever-increasing debt burden shows that the Government has not been bold enough in shaping a consistent supply-side agenda, or improving our competitiveness. And while the spirit of the Coalition’s deficit reduction policy is in the right direction, it says something that it is a former Archbishop being vocal about the immorality of debt when many Conservatives would rather talk about immorality of high pay.”
> Earlier on ToryDiary, Tim Montgomerie said George Osborne's long-term deficit reduction strategy is correct, but his short-term growth measures have been disappointing.