Recession almost over, says BCC
The UK economy is on the verge of coming out of recession, the British Chambers of Commerce (BCC) has said.
Figures from over 5,000 firms indicate that both the manufacturing and service sectors showed improvement in the third quarter of the year, the BCC’s latest economic survey reported.
The results suggest that the long decline in business activity is finally coming to an end, although the recovery, the BCC insisted, is fragile.
Confidence was up across the board, the survey found, particularly in manufacturing where turnover confidence climbed 34 points to 36.
Employment in the services industries climbed to its highest level since the third quarter of 2008.
While still a problem for many firms, cashflow has also shown signs of improving: manufacturing cashflow rose by 22 points to -10, while in the services sector it advanced 9 points to -8.
Domestic orders and sales were likewise on the increase.
David Frost, the BCC’s director general, said: “The most encouraging feature of these results is that confidence has strengthened dramatically in both manufacturing and services. In the face of huge challenges, British businesses are showing resilience.
“It is vital that the government now demonstrates a clear determination to support wealth-creating firms. Unless business confidence is nurtured and allowed to drive the economy out of recession, the country’s recovery will be stunted, and we will face a risk of a double-dip recession.”
Mr Frost urged the government to continue its investment in infrastructure and to avoid placing additional tax burdens on business.
He also argued the case for a moratorium on new employment laws and the scrapping of the planned increase in National Insurance contributions in 2011.
David Kern, the BCC’s chief economist, added: “The results support our assessment that the UK economy is on the brink of leaving recession. However, the improvement is not sufficiently strong to allow us to conclude without doubt that GDP has already returned to positive growth.
“The economy is still frail. With a number of critical balances still negative in both sectors, the emerging recovery is vulnerable to a setback. Measures are needed to ensure that serious risks of a relapse can be overcome.”