Experts warn over uncertain economic recovery

Industry experts said the outlook for economic recovery was "uncertain", despite the 0.1 per cent increase in growth which has been claimed as a signal for the end of the recession.

Lee Hopley, chief economist of the Engineering Employers Federation, said: "Whilst today's data confirm that manufacturing is now out of recession, they also continue to raise questions over the health of the wider economy.

"The trajectory for the recovery, particularly in the next six months, is an uncertain one and the best prospects remain an export driven turnaround."

Labour MP John McDonnell (Hayes and Harlington) said: "The confirmation that the UK has emerged from recession is, of course, welcome, but the fragility of the economy and its vulnerability to a double-dip recession cannot be under-estimated."

Andrew Fisher, co-ordinator of the Left Economics Advisory Panel, said: "The recession is not over for the 2.5 million unemployed and the 1.8 million families waiting for housing. Nor is it over for the millions more who have reduced their hours or taken a pay cut during this recession.

"The risk of a relapse into recession is acute - with the UK banks still exposed to the US housing market, and consumer demand here weakened by unemployment, pay freezes and short-time working."

John Wright, chairman of the Federation of Small Businesses, said: "Today's GDP figures begin to show encouraging signs, although at 0.1 per cent recovery remains frail. In order to strengthen the recovery it is important that we boost consumer confidence and demand and that interest rates are held steady as continued investment in the economy will be the key to ensuring a sustainable recovery.

"For small businesses, having access to affordable finance and credit is important, as firms will look to grow and create jobs.

"The FSB urges Government to rethink its plans to increase employer National Insurance contributions as this tax on jobs will discourage small businesses from taking on additional staff, which will prevent them from growing and put a further block on economic recovery."

TUC general secretary Brendan Barber said: "These figures show just how fragile the economy is. With the threat of a double dip recession looming large, it would be madness to cut public spending now.

"The 2.5 million people currently without work will draw little comfort from the news that the UK is now officially out of recession. Unemployment will increase again, with more people continuing to face long spells out of work.

"No sectors of the economy are fully recovered and areas such as construction are still really struggling. Tough decisions lie ahead to get Britain back in full working order."

Charlie Mullins, millionaire plumber and owner of Pimlico Plumbers in London, said he will not be opening the champagne yet, adding: "As the owner of an independent business fighting daily battles with Labour's economy, I think there is still a long road ahead before we are truly back on track.

"Any tiny rise in GDP and the small reduction in unemployment have to be countered by so many other factors that are still dragging the economy down and making people worse off.

"Costs like spiralling fuel prices, the jump in inflation and the impending increase in National Insurance will hit those in work hard in the pocket. This is bad news for businesses across the country that are already up against it."

David Birne, a licensed insolvency practitioner at HW Fisher Chartered Accountants, said: "For many companies the technical end of the recession will be the trigger that puts them out of business.

"While banks and trade creditors sit tight during recessionary periods for their own financial security, once economic recovery begins they proactively begin to recover their debts and it's this process that tips many companies over the edge.

"The increased bullishness of creditors and lenders translates into increased financial stress for already struggling companies."

David Frost, director-general of the British Chambers of Commerce, said: "This is good news, but clearly growth is anaemic, and it certainly means that the economy is far from being out of the woods.

"It is essential that the Government demonstrates an unwavering determination to support wealth-creating companies in 2010. Additional business taxes must be avoided, and the 1 per cent increase to employers' National Insurance contributions, planned for 2011, should be scrapped.

"Unless the private sector is given the freedom to create jobs and wealth, the UK's economic recovery will be slower than it should be, and we will face the serious risk of a double-dip recession."

The group's chief economist, David Kern, said: "These figures are disappointing and well below most analysts' expectations.

"The main aim now must be to ensure that the modest recovery consolidates and slowly gathers momentum.

"It is critical for both the Government and the Monetary Policy Committee to pursue policies that make it possible for business to invest and export.

"Regulatory burdens must be removed wherever possible, and access to finance improved. A double-dip recession must be avoided at all costs."

Dermot Finch, chief executive of the Centre for Cities research group, said: "The UK as a whole is now out of recession - just - but the recovery will be slow and very uneven. Cities with a strong business base - like Brighton - are set to bounce back.

"But struggling cities like Doncaster will take a lot longer to recover - and will be hit hardest by public spending cuts. The next Government must have a plan to help struggling cities get back on their feet."

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