Double-dip recession risk remains, experts warn

The Shadow Monetary Policy Committee said that rocketing fuel costs and the ever increasing cost of living are squeezing household incomes, hitting the retail sector and small businesses.

The committee, chaired by Leeds law firm Lee and Priestley in association with the Yorkshire Post, called on the Government to invest in small business and manufacturing to create wealth.

Mark Stuart, political columnist and biographer, said: “Things will get worse still – so far much of what has gone has been the dead wood being cut away.

“We still have three more years of cuts to get through and that impact is yet to come into the economy – £100bn has to come out of the economy in that time.

“I am extremely worried whether they will be able to rebalance the economy quickly enough.

“I am not a fan of quantitative easing – but I would be thinking about it this summer, I think bold and decisive action is necessary.”

The committee said there was a genuine risk of stagnation, and said if quantitative easing was used again, more would need to be done to make sure the funds reach small businesses.

The warnings come after figures revealed the UK economy only grew by 0.5 per cent in the first three months of the year - well below the Office for Budget Responsibility prediction of 0.8 per cent. The manufacturing and services sectors had performed well, the Office for National Statistics said, but construction output had fallen sharply.

The committee voted to retain interest rates at their current level.

Margaret Wood, regional chairman of the Institute of Directors in Yorkshire, said the rising cost of oil and its impact on the prices at the pumps showed that more needed to be done to invest in sustainable fuels.

“The Government needs to invest in alternatives other than just wind,” she said. “How much does the Government keep in tax on fuel? You have to ask where is that going.”