No need for Osborne to panic just yet, say IoD
The Institute of Directors (IoD) North West has urged Chancellor George Osborne not to resort to ‘Plan B’ despite sluggish GDP figures, released last week.
Darrell Matthews, the IoD’s regional director for the North West, said the 0.2 per cent growth in the second quarter of 2011 heralded the L-shaped recovery predicted by the IoD since the recession hit.
He also said it was likely the Bank of England would again use quantitative easing to put more money into the economy.
Mr Matthews said: “We’re not back in recession but with numbers like these it might feel as though we are. Even though temporary factors may have reduced the quarterly growth rate that does not mean we can expect a bounce back in Q3. This is the L-shaped recovery, in the wake of a financial crisis, the IoD has consistently forecast over the past two years.
“But let’s be quite clear: weak GDP growth does not mean that we should resort to Plan B with fiscal policy. Outside of the euro-zone debt crisis the biggest threat to the economy at present is monetary, not fiscal, policy. The overall money supply is flat at best and until it accelerates we can have no confidence in a sustained upturn. The likelihood of further quantitative easing has increased in the wake of today’s figures. Even with more QE we’re probably looking at just one per cent GDP growth this year.”
The IoD North West represents more than 2,500 members across Greater Manchester, Merseyside, Lancashire, Cheshire and Cumbria.