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UK 'months away from recession'
The UK is in imminent danger of plunging into a recession, the British Chambers of Commerce (BCC) has claimed.In one of the starkest warnings yet of an impending economic crash, a survey of 5,000 firms by the business organisation showed companies across the country are struggling to cope with falling order books and rising costs.
The survey, which concentrated on the second quarter of year, revealed the service sector in particular is suffering from the pressures of the credit crunch. Service firms, which account for three-quarters of the economy, saw "alarming" declines, while confidence among manufacturers also plummeted.
In addition, overall cashflow levels were at their worst point since 1992 while employment expectations dipped to the lowest figure for almost four years.
The BCC cautioned that the economic outlook for the business sector was "grim" and "ominous" predicting that the slowdown could be "longer and nastier than anticipated". If current trends continue, the group added, the UK could be just months away from a technical recession.
David Frost, BCC director general, said: "This is obviously deeply worrying, not just for business but for the consumer too, with both manufacturing and services reporting negative results. The temptation for the government will be to raise business taxes in the next pre-budget report because the exchequer is running out of money. This would be a catastrophe.
"I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country: to put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on – confidence."
Number of comments: 1
BusinessZONE 8-Jul-2008
Categories: News
Times read: 2888
Gordon Brown, his government, opposition politicians and Whitehall Mandarins are all to blame for why the UK economy is not fit-for-purpose in the 21st century. They have all based their economic theories over the past 30-years on the ‘service industry’ phenomena that is highly susceptible to a global turndown unlike to a lesser extent, the manufacturing/industrial sector. Unfortunately now, the banks will not support that part of our economy, which has the propensity to weather a recession. They never have done as service industries have always come first and where our financial institutions have been progressively programmed and brainwashed in this way. Indeed, the banks do not understand also that only by having a high-tech manufacturing sector can any nation survive in the long-term in the 21st century. In this respect if they need advice, one has only to look at China for a comparison. With in excess of US$1.5 trillion in foreign reserves now that are increasing at over US$30 million a day anyone with any financial intelligence should understand this quite clearly and where manufacturing is king. Unfortunately our astute financial masters do not. No recession in China I can tell you, either now or in the future. The reason, the Chinese are the greatest savers in the world at 40% of all income earned and therefore in relative terms, recession proof. Indeed the Chinese economy has been predominantly built upon home savings and not inward investment as many would like us too believe. Therefore when will the penny drop in this country I ask and when will our governments and financial institutions start to understand that only through the principal support for high-tech industries will Britain flourish economically again. For this is the only area of economics that will count in this century I can tell you.
Therefore it will not be a change in political parties that will transform our economic fortunes, but a change in the way in which people in high places think. That is where it all goes wrong as it is certainly doing today and will do for many years to come.
Dr David Hill
World Innovation Foundation Charity
Bern, Switzerland
Charity No. CH-035.7.035.277-9
