BCC cast doubt over Q3 recession exit
The British Chambers of Commerce (BCC) has cast doubt over the UK’s exit from recession in the third quarter.
Many reports are suggesting that the UK will emerge from recession in the July to September, however the leading business group said while business confidence has strengthened, the economy was still “frail”.
Recently, there has been mixed economic data in the UK, which suggests that the economy may not exit recession in the third quarter – official data due on 23 October will reveal if the UK has emerged from recession.
If not, it will be the first time the UK has endured six consecutive quarters without growth.
In its quarterly survey of more than 5,500 firms, the lobby group said the pace of decline in domestic sales and orders for both sectors was at its slowest in over 12 months.
Services companies reported growth in export orders and sales for the first time in a year.
However, manufacturing export sales were weak, while export orders declined – albeit at their slowest rate since summer 2008.
Furthermore, last week the Office for National Statistics (ONS) revealed a shock fall in UK industrial output in August.
Manufacturing output fell 1.9% compared with July – the largest fall since January, according to the ONS. Analysts had expected a rise of 0.3%.
BCC chief economic adviser, David Kern, comments: “The Q3 results support our assessment that the UK economy is on the brink of leaving recession. However, the improvement is not sufficiently strong to allow us to conclude without doubt that GDP has already returned to positive growth.”
Last week, the National Institute of Economic and Social Research also estimated that the economy did not grow in the third quarter.
In other news, the British Retail Consortium (BRC) reported a rise in UK retail sales of 2.8% in September but warned that “we mustn’t get carried away” as the figures compare with last September when the collapse of Lehman Brothers and the turmoil in the financial markets dented consumer confidence.
Today, however, the Royal Institution of Chartered Surveyors (Rics) has discovered that a lack of homes up for sale has resulted in the strongest rise in house prices since the start of the credit crunch.
According to Rics, its headline house price balance has grown to its highest level since the autumn 2007. It said that almost one quarter (22%) more surveyors thought prices gained rather than declined during September – this represents the highest proportion since May 2007.
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