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UK firms 'see recession looming' Recession 'looming' for UK firms
(10 minutes later)
The UK is facing a serious risk of recession, according to a survey of almost 5,000 businesses. The UK is facing a serious risk of recession within months, the findings of a survey of almost 5,000 small and medium-sized businesses suggest.
The British Chambers of Commerce's (BCC) quarterly report found the credit crunch and rising costs had dented the most important sectors of the economy.The British Chambers of Commerce's (BCC) quarterly report found the credit crunch and rising costs had dented the most important sectors of the economy.
Firms in the manufacturing and services sector said domestic sales and orders had slowed over the last three months.Firms in the manufacturing and services sector said domestic sales and orders had slowed over the last three months.
If these trends continued, British companies were only a few months away from a recession, the BCC warned. If these trends continued, a recession was only months away, the BCC warned.
The BCC, which represents many small and medium-sized businesses, also said firms were experiencing serious cash-flow problems.The BCC, which represents many small and medium-sized businesses, also said firms were experiencing serious cash-flow problems.
Its economic adviser, David Kern, said the survey showed a "menacing deterioration" in UK prospects.Its economic adviser, David Kern, said the survey showed a "menacing deterioration" in UK prospects.
"We are now facing serious risks of recession," he said."We are now facing serious risks of recession," he said.
Grim outlookGrim outlook
"The outlook is grim and we believe that the correction period is likely to be longer and nastier than expected.""The outlook is grim and we believe that the correction period is likely to be longer and nastier than expected."
Services firms, which include restaurants, gyms and tour operators, have been particularly hard hit, the BCC reported.Services firms, which include restaurants, gyms and tour operators, have been particularly hard hit, the BCC reported.
Sales and orders, job expectations and confidence in this sector had hit their lowest levels since the recession of the early 1990s.Sales and orders, job expectations and confidence in this sector had hit their lowest levels since the recession of the early 1990s.
The report is likely to add to the wave of pessimism sweeping across the business world, from retailers to house builders.The report is likely to add to the wave of pessimism sweeping across the business world, from retailers to house builders.
Last week, the housing market suffered another blow after the Bank of England said mortgage approvals had plunged by 28% in May and were 64% lower than a year earlier.Last week, the housing market suffered another blow after the Bank of England said mortgage approvals had plunged by 28% in May and were 64% lower than a year earlier.
There has been disappointing news on house building and mortgages House builders are cutting jobs and offices as the property slump continues.There has been disappointing news on house building and mortgages House builders are cutting jobs and offices as the property slump continues.
There was also grim news from manufacturers last week, a sector that had provided the only bright spot on the horizon until recently.There was also grim news from manufacturers last week, a sector that had provided the only bright spot on the horizon until recently.
A survey showed output had fallen at its sharpest rate in nearly a decade, while inflation pushed up factory gate prices.A survey showed output had fallen at its sharpest rate in nearly a decade, while inflation pushed up factory gate prices.
On the High Street, a profits warning from Marks & Spencer has not helped.On the High Street, a profits warning from Marks & Spencer has not helped.
The BCC's director general David Frost said the report was deeply worrying.The BCC's director general David Frost said the report was deeply worrying.
"I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country," he said."I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country," he said.
"To put more pressure on business would not only restrict business growth and hit the consumer hard, it would crush further what our economy is based on - confidence.""To put more pressure on business would not only restrict business growth and hit the consumer hard, it would crush further what our economy is based on - confidence."
Some economists believe the chances of a recession in the UK are now 50:50.Some economists believe the chances of a recession in the UK are now 50:50.
They had hoped the slowdown in the economy would eventually reduce inflation, without turning into full-blown recession.They had hoped the slowdown in the economy would eventually reduce inflation, without turning into full-blown recession.
There are a number of definitions of a recession, but the most commonly used one is when there are two quarters in a row of economic contraction, or negative growth.There are a number of definitions of a recession, but the most commonly used one is when there are two quarters in a row of economic contraction, or negative growth.