British Chambers of Commerce warns of deteriorating economic situation

The British Chambers of Commerce has warned of “a frightening deterioration in the UK economic situation” after the results it released in its Fourth Quarter Economic Survey for 2008 with some of the worst figures on record.

BCC director-general David Frost said nearly 6,000 businesses employing more than 680,000 people responded to the survey which was first published in 1989.

The survey reveals not a single positive feature for the Q4 results with domestic demand plunging, exports falling and plummeting confidence with both the manufacturing and the services industries the worst hit.

Within the domestic markets, manufacturing reported a 25 point drop in sales to -38% while the service sector saw a 24% point fall, down to -31%.

Exports have also been badly affected as any benefits gained through the falling pound have been wiped out by the drop in demand overseas.

Frost 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 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.”

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