The Government must urgently press ahead with its quantitative easing programme or other mechanisms to encourage banks to lend, business leaders said this week.

Birmingham Chamber of Commerce and Industry (BCI) was responding to the latest GDP figures for the second quarter of 2009.

Businesses in Birmingham and Solihull were left facing the harsh realities of the recession as the UK economy shrank by 0.8%, official figures have revealed.

BCI president Bridget Blow said: ""Unemployment in the region has soared in the last quarter and today's figures are further evidence to suggest that quantitative easing needs to be expanded next month or the introduction of other mechanisms to encourage the banks to lend". 

"The fifth successive quarter of decline is much bigger than the 0.3% in output forecast by economists which is very worrying.

"The lack of bank lending, which the quantitative easing programme aims to address, and retrenchment in global demand continue to be primary concerns among the local business community, reflecting a mood of uncertainty. 

"The services, construction and production industry have all recorded a decline in output between April and June which indicates that the recovery may take longer than expected." 

"From a year earlier, the economy shrank 5.6 percent, the most since records began in 1955 and this needs to be addressed through aggressive policy stimulus."

 "Business must assume great uncertainty for some time to come."