British Chambers of Commerce (BCC) Quarterly Economic Survey results – Q1 2009
The results of the Quarter1, 2009 British Chambers of Commerce Economic Survey confirm that the UK recession is still very serious, and is likely to continue for some time.
Data from over 6,500 firms, employing nearly 900,000 people, highlights a worrying deterioration in manufacturing, with falls to record lows in almost all indicators.
Sharp declines in manufacturing exports, which reach 10 year lows, show that heavy falls in the value of sterling have been offset by the global downturn and low levels of demand.
In the service sector, the critical balances remain distinctly weak by historical comparisons. Nevertheless, the position in services has improved in all key areas this quarter.
The pace of decline in services appears to be slowing. But, there is a risk that without further measures which support wealth-creating businesses, these hopeful signs will not turn into a sustained recovery.
The economy continues to face severe threats, and there is a clear need for corrective action. The government must act forcefully to ease the recession and help rebalance the economy towards exports and investment.
Commenting, Director General of the BCC, David Frost, said:“The Budget is an opportunity for the government to show business that it is doing everything possible to support them.
“It will be business that drives the UK out of recession and for this reason it is vital that they have the freedom to create jobs and wealth.
“Although it is encouraging to see improvement in the service sector, there is more pain to come in this downturn. Manufacturing is still being hammered and exporters see little light at the end of the tunnel. Limiting the damage to our manufacturing base must be a national priority.”
David Kern, Chief Economist at the BCC, added:
“The UK recession remains very serious and is likely to continue until the end of the year. On the basis of these results, we expect GDP to fall by more than 1% in Q1 2009. For 2009 as a whole, our forecast now indicates a decline in GDP of more than 3%.
“The measures taken in recent months have failed to alleviate the downturn. This survey shows improvement in services, but these are fragile gains and will fizzle out without supportive policies.
“The results point to further increases in unemployment, with a peak of 3.2 million in the third quarter of 2010. To limit the upsurge in the jobless total, it is vital to slash the regulatory burden on business.
“In the face of recession, the policy stance must remain expansionary and quantitative easing should be aggressively pursued.
“Despite the UK’s difficult fiscal position, targeted measures are needed in the Budget. This has to be combined with a credible plan for drastically cutting back the deficit in future years. Painful spending cuts will be needed in the medium-term.”