The UK's return to recession is a blow to the retail sector at a time when a boost to consumer confidence is desperately needed, said Stephen Robertson, director general with the British Retail Consortium. His group has previously warned that temporary bright spots, such as last month's retail sales figures, cannot disguise the fundamental difficulties faced by households and businesses.
This year now looks like being tougher than previously thought, Robertson said in a statement today. “With inflation growing at almost three times the rate of average wage increases and personal budgets under pressure from high fuel and utility bills, consumers have continued to cut back on many areas of spending,” he said. “If it's to rekindle recovery the government must deliver a credible growth strategy. It should halt its tsunami of destructive new regulations and taxes. They are adding costs to individuals and households and can only prolong this new recession."

Mark Littlewood, director general at the Institute of Economic Affairs, agreed that action needs to be taken. “The government does not seem to have grasped the need for urgency,” he said in a separate statement. “It must get to grips with the underlying problems the UK economy is facing – suffocating bureaucracy, ballooning debt, as well as high and complex taxes. Today’s growth figures are further evidence that tweaking round the edges will not go far enough in addressing the systemic issues hampering growth. Of course the context is difficult with rising commodity prices and the Eurozone in crisis, but there is still more Britain can and should be doing.”

The talk of recession also fuels fears of investors into Europe. Brett White, CEO of CBRE, said in the company’s first quarter conference call Tuesday, said the real issue with Europe is the amount of uncertainty. “When you have uncertainty in a market place it makes it hard to find pricing,” he said in response to an analyst asking about a drop-off in lending. “When there’s uncertainty in the market place, people just slow down and they take their time and they do a lot more work to make sure that they have got a view on pricing, and right now in Europe, I think the story is more about uncertainty in the market place which slows down transaction volume.”