British Chambers of Commerce (BCC), Quarterly Economic Survey (Q4)
The British Chambers of Commerce is today (Tuesday) publishing its Fourth Quarter Economic Survey. Nearly 6,000 businesses, employing over 680,000 people, responded.
Results in quarter four (Q4) highlight a frightening deterioration in the UK economic situation – they are the worst on record for both manufacturing and services since the survey was first published in 1989.
There are no positive features in the Q4 results. Domestic demand is plunging, exports are falling, and confidence is plummeting. All the critical national balances have worsened in Q4, for both manufacturing and services, and all are in negative territory.
It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace. The collapse in all the Q4 confidence balances to record lows is particularly ominous.
Key findings include:
The manufacturing sector’s balances for home sales and orders, employment expectations, investment, confidence, and cash-flow have plunged to record lows in Q4
In the service sector, all the key balances, without exception, are at record lows in Q4
Q4 domestic balances are particularly disturbing. Home sales and orders, in both manufacturing and services, are in negative territory for all firm sizes and for all UK regions
The economy is clearly facing exceptional threats. The marked fall in all Q4 export balances, and their move into negative territory, indicates that big falls in the value of sterling have not benefited UK exports, because of the adverse effects of the sharp global downturn
David Frost, Director-General of the British Chambers of Commerce, 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.”
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.
“A prolonged recession can still be averted, if the authorities adopt urgent and additional forceful corrective measures.
“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.
“The smooth flow of finance to businesses must be sustained at all costs, and business taxes will have to be cut.”