Comment: Recovery begins but it will be a long hard road

NOW that Britain is officially out of recession, the UK government will be keen to focus on the other R word – recovery – though a number of factors must come together to make it stick.

Chancellor George Osborne has already launched the new message, claiming that the 1 per cent rise in output in the last quarter is evidence that the economy is healing.

He needs to be careful. For the most part, businesses are still feeling nervous and companies are laying off workers in chunky numbers, not least Ford whose jobs bombshell could not have been more badly timed for Downing Street’s attempts at talking up prospects. For the year as a whole, the underlying picture remains sluggish.

The man and woman in the street, struggling with higher bills, wage restraint, job uncertainty and continuing public sector spending cuts, will take some convincing that things are improving. Young people unable to find a job will share that pessimism.

However, it’s a mixed picture. Anecdotal evidence from companies suggests there are pockets of growth and that some are doing better than the official figures indicate. There are plenty of tradesmen who say they are run off their feet with work, companies whose main problem is hiring appropriately skilled staff, and sectors such as whisky and energy which are booming. The luxury end of most sectors seems to be almost bomb-proof and the much-troubled retail sector has its winners, particularly those which have mastered the challenges of online selling.

The July to September GDP figure was higher than most analysts had expected and although the economy is 4 per cent off its pre-recession peak, it is the best quarterly growth statistic since 2007. Even after stripping out the 0.3 per cent contribution from the Olympics it gives cause for some optimism and may persuade the Bank of England not to inject more cash into the economy next month, after all.

One worry is that most of this growth, and the Olympic effect, will be concentrated around the more active south-east of England and that some areas of the UK, including Scotland, may still be in recession.

Confidence will play its part in how quickly and how substantially the economy grows from here, but a temptation to blame or demand solutions only from governments in Westminster or Holyrood is unreasonable. There needs to be a more sustained shift to private sector growth but there is still a huge overhang of debt at the banks and worries over the direction of the eurozone. On the plus side, companies are conserving cash and some are keen to start investing.

In this twin-track economy the negatives will weigh on the positives so that progress is slow. There are still too many temporary jobs, too few real opportunities for the young and not enough orders to give companies breathing space. This may be the start of the road to recovery, but it will be a long one.

Ford faced hard choice, jobs or competitiveness

the closure of the Transit factory in Southampton brings an end to a century of vehicle manufacturing by Ford in Britain. However, the investment in engine production will ensure skills are maintained and that Ford retains a commitment to the UK.

While the job losses are painful for those affected, the company is making tough decisions to close underused European factories and reduce losses to ensure it remains competitive in a sector suffering from overcapacity.