Worst of Recession is Over Claims BCC

Mike Symes - Tuesday 07.07.09, 09:34am

The results of the Quarter 2, 2009 British Chambers of Commerce Economic Survey confirm that the worst of the recession is over.

Data from 5,600 companies shows welcome progress in both the manufacturing and service sectors with most key indicators improving in the last quarter. However, almost all the critical measures remain in negative territory and many are still weak by historical standards.

The most encouraging feature of the Q2 results is a marked strengthening in confidence following sharp declines over the previous two quarters. Turnover confidence has now entered positive territory for the first time since Q3 last year and it has improved dramatically for manufacturing firms, rising 40 points from -38 in Q1 to +2 in Q2.

Employment expectations in both sectors saw gains this quarter, but the BCC continues to predict unemployment will reach 3.2 million - some 10% of the workforce - by mid 2010.

While these results finally point to some good economic news, there is a risk that without a continued focus on limiting the impact of recession, the economy could drop-off suddenly, adding weight to the argument that we are heading towards a W-shaped recession. With official GDP figures revised heavily downwards only last week, it is far too early to say that recovery is secure.

Commenting, British Chambers of Commerce Director General, David Frost, said: “These results are sending Gordon Brown and Alistair Darling a strong message from the business community. It is absolutely vital that the improvement in business confidence is nurtured.

“Our economy is based on confidence, and wealth-creating businesses need to know they will be given the freedom and flexibility to drive the UK out of recession and into a sustainable recovery. The government needs to think long and hard about its policies on taxation and red tape, which threaten to stifle growth and employment. The planned increase in National Insurance contributions is nothing more than a tax on jobs and it should be abandoned immediately.

“Signs of improvement in the economy cannot be an excuse for the government to start increasing business tax as a remedy for the ill health of the nation’s finances. Risking any fragile gains would be a huge mistake.”