UK Economic Recovery Under Way, says BCC
The UK economy has shown modest signs of recovery in 2012 and should avoid a double-dip recession, the British Chambers of Commerce (BCC) has said.
The BCC’s quarterly poll of nearly 8,000 firms across all sectors predicted 0.3% growth in the first quarter of 2012, which the business lobby group called an “encouraging pick up” after the economy contracted by 0.3% in the last three months of 2011.
With a return to growth in the first quarter, the UK would avoid a further recession — defined as two successive quarters of contraction.
The BCC said that healthy overseas demand for exports had boosted the figures, but warned there were still huge challenges ahead, with cashflow for businesses remaining a concern and rising oil and food prices a threat to low inflation.
Growth for the rest of the year was likely to remain sluggish, added the lobby group, which has predicted just 0.6% growth for 2012. This represents a slightly more pessimistic view than last month’s 0.8% forecast by the Government’s Office of Budget Responsibility.
Commenting on the survey, BCC chief economist David Kern said:
“The results point to a modest improvement in the economic situation. The UK economy will likely avoid a recession. However, growth is likely to remain low for some time, and a return to a more normal pace is unlikely until 2013.”
To boost confidence and drive growth, Kern added that more “forceful measures” were needed from the Government, such as improved access to small-business lending and the scrapping of this month’s business rate increase.
BCC director general John Longworth said it was encouraging that businesses were more confident at the start of 2012 than at the end of 2011.
“But that underlines the need to support and foster growth and investment by companies to ensure that the increases we have seen in the first quarter continues,” he said.
Other business groups agreed with the BCC’s cautious economic view, with experts predicting a fairly flat outlook for the rest of this year.
Last month’s financial services survey of nearly 100 firms by the Confederation of British Industry (CBI) revealed a growth in business volume during the first quarter of 2012 and an unexpected surge in business optimism and recruitment, which were largely due to a stabilising eurozone, it said.
But business levels were still “below normal”, according to CBI chief economic adviser Ian McCafferty, who warned that economic conditions remained challenging.