Double-dip Recession Still Avoidable, says BCC
Small businesses may struggle in the first half of 2012, but a double-dip recession is still avoidable, the British Chambers of Commerce (BCC) has said.
In its quarterly economic survey of 7,850 businesses, the BCC said that a decline across the manufacturing and service sectors in the last quarter of 2011 and “significantly weakened” expectations for the next three months suggested that the UK recovery was stalling.
GDP was likely to stagnate at least until the middle of 2012, the business group added, including one quarter where it expected the UK economy to contract. It also expected unemployment to rise to 2.77 million by the end of the year, up from 2.62 million.
For small firms, tough trading conditions looked set to continue well into the year, largely due to a “worsening international situation and growing risks facing the euro zone”, both of which posed a threat to UK exporters and business confidence overall, according to BCC director general John Longworth.
However, despite the gloomy outlook, Longworth added:
“A new recession is not a foregone conclusion. A slowdown across the euro zone is inevitable, but Britain need not suffer a similar fate.”
He urged the Government to step up its plans for credit easing — which would see the Government underwrite bank loans to small firms — and infrastructure development in order to boost jobs and growth.
“Ministers need to move faster on promises made in the Chancellor’s Autumn Statement,” said Longworth.
Responding to the BCC’s forecasts, a spokesman for the Department for Business, Innovation and Skills said that the Government had announced a range of steps to support small firms, including cutting the headline rate of corporation tax every year until 2014, reducing red tape and establishing new Enterprise Zones.
“In addition, £21 billion is to be made available through the National Loan Guarantee scheme which will lower the cost of bank loans for firms, and the Government is extending the Enterprise Finance Guarantee (EFG) from January this year to include businesses with up to £44 million annual turnover.”
For further business advice read about the National Loan Guarantee scheme