British economy nearing recession warns BCC
The UK economy is heading towards a recession following a new report from the British Chambers of Commerce (BCC).
A quarterly survey of 5,000 companies carried out by the BCC, which represents small and medium sized companies, found that business confidence is at an all time low.
According to the BCCa��s report, confidence has collapsed in both the manufacturing and service sectors, while the group believes the number of people unemployed will increase by between 300,000 and 350,000 over the next couple of years, which would take the unemployment total to over the two million mark.
Meanwhile, figures from the Office for National Statistics (ONS) established that production in UK manufacturing in August fell for the sixth month in a row. The last time output fell for six consecutive months was between July and December 1980.
According to the ONS, manufacturing output contracted by 0.4% in August and had fallen 1.9% from the same point last year.
The ONS added that the wider measure of industrial production had fallen by 0.6% in August, taking the annual rate of decline to 2.3%.
The news has called for the Bank of England to cut interest rates when it meets this week to avoid a major recession. However, many economists believe that a quarter point reduction is inevitable while some believe a 0.5% reduction is on the cards.
Commenting on its survey, the BCC said its results were a�?exceptionally bada�? and said the economy was under a�?immense pressurea�� for the second consecutive quarter.
A country is considered to be in recession when it experiences two consecutive quarters of declining economic output.
According to David Page of Investec, the figures are much worse than anticipated and the slowdown suggests that the UK economy is suffering on all fronts.
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