Mixed reaction over GDP figures

The dismal GDP figures for the end of 2011 have been blamed on Chancellor George Osborne's tough spending cuts, prompting calls for further help for Britain's beleaguered businesses.

However, most economists are hopeful that the decline will be as bad as it gets for now, with challenges faced by consumers gradually starting to ease.

Here are some of the comments from economists, unions and business leaders:

:: TUC general secretary Brendan Barber warned that unless the Government starts focusing on jobs and growth, it could preside over a decade of economic stagnation.

He said: "The Chancellor's economic strategy is going horribly wrong. The grand austerity plan is failing to tackle the deficit, causing unemployment to spiral out of control, and is now dragging the country back towards recession.

"Even the most loyal fans of the Chancellor's plan, from the IMF to the ratings agencies, are urging him to change course and focus on stimulating the economy, rather than pursue reckless austerity measures that are making a second global recession look more likely.

:: Graeme Leach, chief economist at the Institute of Directors, expects the Bank of England to sanction more emergency help for the UK economy but said the eurozone remained key to the recovery.

He said: "The tightrope walk between recession and recovery continues. We've taken one step towards a double-dip recession, and it's now probably 50-50 as to whether we'll take the second, with a fall in output this quarter as well.

"But even if output does increase in Q1, we'll continue to experience the feel-bad jobless recovery for some time yet.

"The tipping point for recession or recovery remains economic developments in the eurozone. If the euro crisis gets worse, sustaining UK recovery looks almost impossible."

:: British Chambers of Commerce chief economist David Kern said the UK economy faced difficult challenges, but there was no need for undue pessimism.

"The Government must persevere with its important job of cutting the deficit. But the fourth quarter GDP figures reinforce the need to reallocate priorities within the overall spending envelope to growth-enhancing policies.

"Reducing red tape, cancelling the planned increase in business rates, providing more support for exporters, and implementing an effective credit-easing programme as soon as possible, will help businesses to grow."

:: Alan Clarke, UK and eurozone economist at Scotia Capital, said business surveys were showing signs of stabilising in the eurozone - the UK's biggest export market - and recent surveys involving purchasing managers indicate the decline in activity in the UK has begun to bottom out.

He said: "Things are about as bad as they are going to get right now. The headwinds facing the consumer are dissipating slowly - particularly as inflation is in the process of decelerating. That should continue throughout the rest of the year - helping consumer spending growth to improve gradually."

:: Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said Wednesday's figure represented the first leg of a technical recession but dire data in October ensured the result was not a huge surprise.

He said: "You can trace this figure back to the escalation of the eurozone crisis. The heightened uncertainty has damaged confidence, causing businesses and consumers to put their spending decisions on hold, paralysing the UK economy.

"There is a danger that this situation will persist, in the absence of a credible and sustainable solution to the eurozone's woes."

:: Aruna Karunathilake, portfolio manager for Fidelity's UK Aggressive Fund, said there were some hopeful signs, given that recent indicators of global economic activity showed some improvement.

He said: "As an investor in the UK stock market, the outlook for the UK economy is not the most important factor driving investment decisions as the UK only accounts for roughly a third of FTSE 100 Index profits.

"I am more optimistic on the outlook for growth in the emerging markets and the US so my fund investments are concentrated on companies with exposure to those regions."