GDP figures: Welsh business plea for help in recession

A slump in the building industry contributed to a shrinking economy

Business leaders have called for Welsh government action after official figures showed the UK recession is getting deeper.

Economic output shrank by 0.7% between April and June, a worse performance than many analysts predicted.

Separate Welsh GDP figures are not available, but the Federation for Small Businesses said rising unemployment worsened the situation in Wales.

The federation called for the Welsh government to help small firms to grow.

"The economic headwind we are battling will not die down until small businesses feel confident enough to be bold, expand and take on staff," said Iestyn Davies, head of external affairs for the federation in Wales.

He said UK-wide policies, including a credit easing plan designed to help businesses borrow, "have yet to have a real impact on the ability of small firms to take on staff and grow".

"It's vital that financial assistance offered to firms through the Welsh government really does reach the hands that need it most," he said.

Chancellor George Osborne said the UK faced "big challenges" and that the coalition government was dealing with the country's debts.

But Labour and Plaid Cymru blamed his economic policies.

Shadow Welsh secretary Owen Smith said: "The figures reiterate the urgent need for the government to change course and take immediate action to boost jobs and growth."

Plaid MP Jonathan Edwards said cuts in public spending were hurting the construction sector.

The Office for National Statistics (ONS) said the building industry saw a sharp slowdown of 5.2%.

Mr Edwards said the economy was in a "downward spiral", adding: "We are paying the price for failing to invest in infrastructure spending when the financial crisis began."

Wednesday's figures are an estimate and could be revised in coming months.

The ONS said it was not yet sure of the size of the effect of the poor weather and the extra June bank holiday.

The Welsh government said the GDP figures were "extremely disappointing" and that it was "doing all we can within our powers" to help businesses.

More than £31m has been given in grants to 118 businesses through a special fund, which the Welsh government estimates has the potential to create 1,800 jobs.

"The UK economy is now producing less than when the UK government came to power two years ago," a spokesman said.

"We repeated warned the UK government their austerity cuts were too deep, too fast. We warned the cuts would lead to a double dip recession. These revised figures prove we were right."