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News that the UK economy has contracted over the last three months is no surprise to business, according to Doncaster Chamber of Commerce.

“Business has consistently warned that the recovery had yet to take hold when the Government began to take an axe to spending,” says Chamber policy researcher Ian Mason, commenting on the half a percent fall in Gross Domestic Product (GDP) in the last quarter of 2010.

Mr Mason says that while it is necessary to reduce public spending, the timing of the cuts and their implementation appears ill-advised, particularly for northern economies that are so dependent on public sector spending.

He warns that the rise in VAT at the start of the year will cost the economy a further £4 billion, which equates to 0.3 per cent of GDP growth, while inflation is set to rise by four per cent.

“Doncaster businesses have shown remarkable resilience to the recession and a report published earlier illustrated that unemployment had fallen in the town for nine successive months; a great achievement,” says Mr Mason.

“If this positive trend is not to be reversed, the Government must react swiftly to calls from the British Chambers of Commerce, and now the CBI, to outline a clear strategy for growth if the still present threat of a double dip is to be avoided.”