BRITAIN is ‘not looking disaster in the face’ with the news the country is again in recession, according to an economics analyst.
Dr Michael Asteris, of the University of Portsmouth, says that whilst today’s news that the economy shrank for the second quarter in a row is disappointing, consumers should not lose confidence.
He said the poor performance of the construction and manufacturing industries had contributed to the 0.2 per cent contraction of the economy, but the figures released today by the Office for National Statistics were only provisional.
Dr Asteris added: ‘The economy is basically stagnant, it’s bumbling along. These figures are provisional and could be revised upwards when other factors are taken into account.
‘Even so, this result is disappointing and it’s going to have a psychological effect.
‘If people hear we are in recession, if businesses hear we are in recession, then they’re not going to have confidence so they won’t build that plant, for example, or introduce new buildings on the commercial side.
‘We’re in a technical recession, and the figures are only just over the line of negative growth, so we’re not looking disaster in the face or anything.’
Dr Asteris said the coalition government is doing as much as it can to try and pull Britain out of the economic mire, but it was never going to be a quick process.
He said it was important to remember that it is a worldwide problem, and as such it is hitting our exports - most of which go to recession-hit Europe - as well as the price of the pound, meaning a lack of investments being made.
‘Our economy for the last three years has been on a life support system,’ he added.
‘We’ve got the lowest interest rates ever, since 1694 when the Bank of England was instituted.
‘The government is, I think, doing realistically all it can at this stage, because what it doesn’t want to do is lose the confidence of the international markets - it doesn’t want to do that because of what we’ve seen happen in Greece, Italy and Spain.’
Commenting on the figures today, chancellor George Osborne said: ‘It’s a very tough economic situation.
It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime.
‘The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.
Meanwhile the Federation of Master Builders called on the government to help the construction industry get back on its feet.
Brian Berry, Chief Executive of the FMB said: ‘The government will find it very difficult to get sustained growth in the economy while the construction industry remains depressed.
‘Construction is essential to the wellbeing of the wider economy because of the variety and quantity of job its creates from apprentice bricklayers to world leading architects.
‘Every £1 spent on construction generates £2.84 in the wider economy which makes it the best investment the government can make to get Britain back on its feet.’
And Jim Davison, south east region director at EEF, the manufacturers’ organisation said: ‘While manufacturing output appears to have gained ground in March, another quarterly contraction is a concern.
‘However, the underlying health of individual sectors is particularly fuzzy at the moment, with a raft of surveys pointing to a modest improvement in manufacturing trading conditions in the first few months of the year.
‘These figures are both a reminder of the big challenges facing the UK and world economies, and a confirmation of the patchy and unsteady recovery that had been expected.’