‘Serious risks of UK recession’: BCC
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The British Chambers of Commerce (BCC) quarterly economic survey among 5000 businesses today published results that are “ominous and show serious risk of recession in the UK”. Some hit historically low levels in the manufacturing sector with a good level of exports due to the weakness of the pound against the euro being the only good news.
The BCC said that if the trends continued, the UK business sector was now only one quarter away from technical recession. In particular, the critical UK domestic balances for home sales and orders recorded negative growth in the last three months in both manufacturing and services.
Other key results from the survey show cashflow in negative territory and at record lows, showing the credit crunch and rising costs have now hit business, and all the confidence balances falling sharply in both manufacturing and services, “a very worrying development”.
Commenting on the survey, BCC director general David Frost (pictured), said: “These results show a real risk of recession in the coming months. This is obviously deeply worrying, not just for business but for the consumer too, with both manufacturing and services reporting negative results. The temptation for the Government will be to raise business taxes in the next PBR because the exchequer is running out of money. This would be a catastrophe.
“I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country: to put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on – confidence.”
BCC economic adviser David Kern said the results signalled a menacing deterioration in UK prospects. “We are now facing serious risks of recession. For the first time in many years, the vital results for domestic sales and orders, and for cashflow, have moved into negative territory for both manufacturing and services. The outlook is grim, and we believe that the correction period is likely to be longer and nastier than anticipated,” he went on.
Manufacturers’ intention to raise prices remained high, rising to a new peak in manufacturing and easing only slightly in services. Businesses were in a lose-lose situation Kern said, with falling demand and the squeeze on consumer disposable incomes limiting how far prices can be increased.
