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UK economy downturn 'frightening' UK economy downturn 'frightening'
(20 minutes later)
Business leaders have painted a bleak picture of the UK economy, with a survey suggesting a "frightening deterioration" towards the end of 2008.Business leaders have painted a bleak picture of the UK economy, with a survey suggesting a "frightening deterioration" towards the end of 2008.
The British Chambers of Commerce (BCC) said its survey results were "awful" and the worst since it began in 1989.The British Chambers of Commerce (BCC) said its survey results were "awful" and the worst since it began in 1989.
Elsewhere, a separate report suggested it had been the worst December for UK retail sales in at least 14 years.Elsewhere, a separate report suggested it had been the worst December for UK retail sales in at least 14 years.
On 23 January, official figures are set to confirm the UK is in recession with six months of negative growth.On 23 January, official figures are set to confirm the UK is in recession with six months of negative growth.
Margins hitMargins hit
The British Retail Consortium figures on sales from the High Street and online said that like-for-like sales in December were down 3.3% on a year ago while total sales shrank 1.4%.The British Retail Consortium figures on sales from the High Street and online said that like-for-like sales in December were down 3.3% on a year ago while total sales shrank 1.4%.
This made for the worst December since the survey began in 1995.This made for the worst December since the survey began in 1995.
Some High Street retailers, including Sainsbury's and Greggs, have been reporting strong Christmas trading - suggesting that the economic picture is not yet entirely bleak.Some High Street retailers, including Sainsbury's and Greggs, have been reporting strong Christmas trading - suggesting that the economic picture is not yet entirely bleak.
Many hard-pressed customers couldn't be seduced into spending Stephen RobertsonDirector-general, BRCMany hard-pressed customers couldn't be seduced into spending Stephen RobertsonDirector-general, BRC
But food retailers were almost the only sector to show growth, the BRC said, amid what it described as "truly awful numbers".But food retailers were almost the only sector to show growth, the BRC said, amid what it described as "truly awful numbers".
"Non-food retailers had a torrid December despite a blizzard of promotions and deals, which would have hit margins," the BRC's director general Stephen Robertson said."Non-food retailers had a torrid December despite a blizzard of promotions and deals, which would have hit margins," the BRC's director general Stephen Robertson said.
"Many hard-pressed customers couldn't be seduced into spending.""Many hard-pressed customers couldn't be seduced into spending."
Despite deep discounts, shoppers have not been spending, the BRC says The BCC report, based on a survey of almost 6,000 firms which employ 680,000 people, pointed to plunging domestic demand, falling exports and plummeting confidence in the last three months of 2008. The manufacturing sector is gloomy about its outlook, the survey found The BCC report, based on a survey of almost 6,000 firms which employ 680,000 people, pointed to plunging domestic demand, falling exports and plummeting confidence in the last three months of 2008.
"It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people."It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people.
"The results highlight a frightening deterioration in the UK economic situation.""The results highlight a frightening deterioration in the UK economic situation."
Its latest survey - which covered the last three months of 2008 - showed "no positive features" it added, with both the manufacturing and service sectors worsening.Its latest survey - which covered the last three months of 2008 - showed "no positive features" it added, with both the manufacturing and service sectors worsening.
Quite frankly the last time I saw anything of this magnitude of decline was when I worked in the West Midlands in the early 1980s David FrostDirector-general,British Chamber of CommerceQuite frankly the last time I saw anything of this magnitude of decline was when I worked in the West Midlands in the early 1980s David FrostDirector-general,British Chamber of Commerce
Manufacturing, home sales and orders, employment expectations, investment, confidence and cash-flow have all hit record lows.Manufacturing, home sales and orders, employment expectations, investment, confidence and cash-flow have all hit record lows.
In the service sector, every key area was at a new low.In the service sector, every key area was at a new low.
BCC director general David Frost called for a national recovery plan to be "rolled out as soon as possible".BCC director general David Frost called for a national recovery plan to be "rolled out as soon as possible".
"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate."These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate.
"Quite frankly the last time I saw anything of this magnitude of decline was when I worked in the west Midlands in the early 1980s," he said."Quite frankly the last time I saw anything of this magnitude of decline was when I worked in the west Midlands in the early 1980s," he said.
"The sheer scale of this comes as a surprise to many of us.""The sheer scale of this comes as a surprise to many of us."
Printing moneyPrinting money
The BCC's chief economist David Kern said that he now expected the UK economy to shrink by up to 2.4% in 2009, rather than the 2.2% he had earlier forecast.The BCC's chief economist David Kern said that he now expected the UK economy to shrink by up to 2.4% in 2009, rather than the 2.2% he had earlier forecast.
"One must say that unfortunately in terms of GDP this recession is worse than in the 1990s," he said."One must say that unfortunately in terms of GDP this recession is worse than in the 1990s," he said.
The MPC is running out of conventional bullets David KernChief economist, BCCThe MPC is running out of conventional bullets David KernChief economist, BCC
But he added it was not worse than the 1980s so it was still possible "to avoid a prolonged depression."But he added it was not worse than the 1980s so it was still possible "to avoid a prolonged depression."
Last week the Bank of England cut the cost of borrowing from 2% to 1.5% - the lowest since the Bank was founded in 1694.Last week the Bank of England cut the cost of borrowing from 2% to 1.5% - the lowest since the Bank was founded in 1694.
Mr Kern said more rate cuts were likely, but that the authorities would have to go further to avoid a prolonged depression, including printing more money.Mr Kern said more rate cuts were likely, but that the authorities would have to go further to avoid a prolonged depression, including printing more money.
"The MPC is running out of conventional bullets," he added."The MPC is running out of conventional bullets," he added.
The suggestion that investment in factories and machinery was at record lows was particularly worrying, said Ross Walker, chief UK economist at Royal Bank of Scotland.The suggestion that investment in factories and machinery was at record lows was particularly worrying, said Ross Walker, chief UK economist at Royal Bank of Scotland.
This indicated that private sector firms would see their capacity for recovery hindered when the UK came out of economic crisis he said.This indicated that private sector firms would see their capacity for recovery hindered when the UK came out of economic crisis he said.