A shrinking economy must sound the alarm for Chancellor George Osborne, a manufacturing chief has warned.
David Ost, regional director of the Engineering Employers’ Federation (EEF), said figures published on Friday showing the economy shrank 0.3 per cent in the final three months of 2012 was a call to action.
He said the figures left “no positives” for manufacturers to take away.
Mr Ost said: “Even assuming some unwinding of activity from the Olympics boost in the previous quarter, this still leaves no real signs of underlying growth in the economy.
“The news from industry was particularly weak, with November’s sharp drop on output contributing to a rather grim fourth quarter and leaving the overall picture for manufacturing in 2012 the weakest since 2009.”
He added the research published on Friday showed that “2013 will not be as bad as 2012”, citing the diminishing threat of the collapse of the Euro, improving global export markets and an improving employment market.
But, the industry leader, whose body represents hundreds of Lancashire manufacturers, added: “The government must hit the accelerator on getting capital projects moving and be clearer about its priorities to give businesses confidence to invest.”
Trade union leaders lined up to mount a fresh attack on the Government’s economic policies after the grim figures, saying its strategy had been a “complete disaster”.
Business leaders were less critical, saying economic momentum would build later in the year, although some admitted there were no positive messages to take from the new data.
TUC general secretary Frances O’Grady said: “The figures confirm our worst fears that the Chancellor’s austerity plan has pushed the UK economy to the brink of an unprecedented triple-dip recession.
“We are now midway through the coalition’s term of office and its economic strategy has been a complete disaster. The economy has grown by just 1%, real wages have fallen, and the manufacturing and construction sectors have shrunk. We remain as dependent on the City as we did before the financial crash.”
John Cridland, director general of the CBI, said: “After a difficult year, the UK economy has ended on a disappointing note.
“We think growth will continue to be fairly flat through the winter but momentum will gradually build later in the year, as the global economy picks up a little and confidence lifts.”
Unite general secretary Len McCluskey called for the Government to change course, adding: “This is now an urgent question of acting in the national interest. This Government has been exposed as failures and fraudsters, and firmly responsible for the continued ruination of our economy.”