Businesses have raised concerns over signs of stagnation in the domestic economy.
The latest Quarterly Economic Survey (QES) from the British Chambers of Commerce (BCC) revealed that businesses are struggling to manage cashflow, as manufacturing, services and exports all show a decline in growth for Q3.
Exports remain low, while the survey also revealed a decrease in the number of manufacturers expanding their workforce, while services had a mild increase.
As a result, business confidence in both turnover and profitability has fallen, while intentions to invest have also declined.
But despite this, the UK can avoid a recession, the BCC claims, provided the Government makes some ‘tough policy decisions’.
Commenting on the results, John Longworth, Director General of the BCC, said: “The results of our latest survey are concerning, but not entirely surprising. Many of the balances are in positive territory, but they are not as strong as we’d like to see. The survey shows the real risks facing the economy and the need for the government to act now in putting business growth at the heart of all its policies. For example, cashflow remains a real concern for businesses, indicating they are under financial pressures. Many businesses are faced with unfavourable payment terms and a lack of access to capital.
“The pace of the UK recovery will remain slow. We can avoid a recession, but this relies on the government making some tough policy choices. While it is imperative that the government perseveres with its deficit-cutting plan, there must be a significant reallocation of priorities within the overall spending envelope. We need a much greater focus on those policies that will help businesses expand, take on more staff, export and invest.”
Speaking of the MPC’s decision to increase quantitative easing by £75 billion, David Kern, chief economist at the BCC said:
“The recent increase in the QE programme to £275 billion is welcomed, but more radical measures are needed. These should be mainly concentrated on purchasing securitised SME loans and other private sector assets. On its part, the government must reprioritise its spending plans to promote growth and wealth creation.”
The news comes as business secretary Vince Cable announced a £170 million boost to the manufacturing industry.
