Economic recovery ‘slow but on the mend’

OBR and CBI give their assessments on the economic situation at MPA’s second General Assembly

AT this year’s Mineral Products Association (MPA) Members General Assembly, which took place on 16 June, delegates from 60 member companies heard speakers from the Office for Budget Responsibility (OBR) and the Confederation of British Industry (CBI) say the economic recovery would be slow, but there is capacity for growth.

Pointing out that the outlook for the economy over the next four or five years was weaker than it had been after previous recessions, Robert Chote, chairman of the new OBR, said: ‘From our point of view, in thinking about the public finances, a big uncertainty which feeds through to the amount of growth we can expect over the next few years is how much spare capacity there is in the economy at the moment – and that is a crucial question in terms of answering how rapidly the economy can grow over the next four or five years.’

Dr Neil Bentley, CBI deputy director-general, said: ‘We were always very unlikely to get that V-shaped bounce back that emerging economies have enjoyed. The picture is one of very steady recovery, but our surveys show that business confidence is improving. The economy is slowly but surely on the mend.’

Dr Bentley added that although the Government had taken bold and decisive steps to tackle the deficit, there were still several issues it needs to deal with.

‘The new carbon floor price cannot be allowed to compromise the competitiveness of our heaviest energy users and must not become little more than a tax-raiser,’ he said. ‘There is a real danger here that successful businesses are going to be forced out of the UK, which would be a disastrous outcome for both jobs and growth.’

He added: ‘The Carbon Reduction Commitment has moved from an energy-efficiency scheme to a tax grab and should be scrapped. And of course there are continuing concerns about the planning system, and fears that the Localism Bill could yet become a ‘Nimby’s Charter’. The Government needs to deal with the tax and regulatory burdens that are holding firms back. It needs to make sure it says the UK is open for business and it means it.’

Jerry McLaughlin, chief economist and director of public affairs at the MPA, commented: ‘In spite of the better than expected early 2011 in some minerals products markets, the view of the OBR and CBI that the economic recovery will be a long haul supports the MPA’s view that industry markets over the next two to three years will be pretty subdued relative to pre-recession levels.’