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| Recession 'looming' for UK firms | |
| (10 minutes later) | |
| 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, 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 outlook | Grim 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. |