Economy declining at Unprecedented Rate
The UK economy declined at a record rate in the last three months of 2008 as domestic sales in the manufacturing and service sectors plummeted, according to the British Chambers of Commerce (BCC).
The BCC’s economic survey of the fourth quarter of last year also revealed that employment levels and business investment fell to their lowest since the survey began in 1989.
According to BCC director general David Frost, the pace of the decline has defied expectation.
“These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate”
“Despite the weak value of the pound, the export sector has not picked up as hoped. It’s a global recession and there isn’t the demand from customers for the goods we produce.” added Frost.
BCC chief economist David Kern added:
“The measures taken by the Government so far have failed to alleviate the downturn.”
“Interest rates will have to be reduced to almost zero in 2009. But interest rate cuts are no longer adequate on their own. The smooth flow of finance to businesses must be sustained at all costs, and business taxes will have to be cut.”
However, while Kern stated that in terms of GDP the current recession is worse than the 1990s, he pointed out that it is not yet worse than the 1980s slump.
“A prolonged recession can still be averted, if the authorities adopt urgent and additional forceful corrective measures,” he said.
In another new report, the British Retail Consortium (BRC) revealed the worst sales figures for December since their survey began in 1995. Like–for–like retail sales in the UK fell 3.3% from December 2007, with food and footwear the only sectors to show an increase. Helen Dickinson, head of retail at accountancy firm KPMG said:
“December’s performance has historically set the scene for the year ahead, so the outlook is indeed bleak. Although the food sector continues to hold up, most non–food retailers are having to manage the ‘double whammy’ of falling sales and falling margins and this doesn’t look like changing any time soon.”