Economic decline now at ‘unprecedented rate’, says BCC
The UK economy is slowing down at a profoundly disturbing rate, the British Chambers of Commerce (BCC) has said after publishing the results of its latest quarterly survey.
The survey, which covered the last quarter of 2008, took in nearly 6,000 businesses employing over 680,000 people.
Describing the deterioration in the economy as “frightening”, the BCC announced that the results for the months between October and December were the worst for both manufacturing and services since the survey was first published in 1989.
Devoid, in the words of the BCC, of any redeeming features, the survey revealed that domestic demand is plunging, exports are falling and confidence is plummeting.
Specifically, the manufacturing sector’s balances for home sales and orders, employment expectations, investment, confidence and cash-flow fell to record lows, while in the service sector all the key balances, without exception, were also at record lows.
David Frost, the BCC’s director general, called for a concerted political effort to reverse the acceleration and depth of the downturn.
Mr Frost said: “These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate. We have to focus on holding the productive sectors of the economy together. If we are to climb out of this morass we will need a strong business base.
“A clearly defined National Recovery Plan will need to be rolled out as soon as possible, involving all politicians.”
The BCC’s chief economist, David Kern, added: “The measures taken in recent months have failed so far to alleviate the downturn. The Q4 results signal big increases in unemployment next year.”
Mr Kern believed that a prolonged recession could yet be averted, but it would need urgent and additional measures.
He continued: “Interest rates will have to be reduced to almost zero early in 2009. But interest rate cuts, though important, are no longer adequate on their own.
“New and more far-reaching measures like a further fiscal stimulus and quantitative monetary easing should be introduced. If the risk of deflation worsens, businesses will face new threats, and the authorities must be ready to introduce emergency policies.”
Mr Kern said that the “smooth flow of finance to businesses must be sustained at all costs, and business taxes will have to be cut”.