Worst of recession over but recovery not guaranteed

Published on Monday 6 July 2009 21:37

THE worst of the recession is over, but talk of recovery is premature and unemployment continues to head over three million, a leading business group today predicted.

The British Chambers of Commerce (BCC) said there had been "welcome progress", especially among confidence levels, which had been badly hit by the economic downturn. But the BCC, which was the first business organisation to warn of a recession a year ago, said sales, orders and employment levels in manufacturing and service firms remained weak.

Unemployment is still expected to reach 3.2 million – some 10 per cent of the UK workforce – by mid 2010, with fewer than half of manufacturers and service sector firms trying to recruit workers in recent months.

The government was warned that, without more measures to limit the impact of the recession, the economy could suddenly "drop off".

The report, based on a study of 5,600 companies in the quarter to June, showed that "serious downward pressures" remained across all sectors of industry in every region of the country.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, which produces its own quarterly report, said: "We will be looking to drill down deeper into the detail of this when the results of the Scottish Chambers of Commerce business survey are published next week, but in the meantime the message is clear that, although there may be signs of light at the end of the tunnel, neither business nor government can afford to take their eye off the ball as we prepare for the future."

David Kern, chief economist of the BCC, said the pace of decline in the economy was "moderating", but he warned that serious downward pressures remained. He said: "The worst of the recession appears to be over, but a recovery is not guaranteed.

"Sustaining any future recovery, and preserving Britain's international credit rating, depends heavily on the adoption of a credible medium-term strategy for improving our public finances. To avoid undue damage to our productive base, painful cuts to spending programmes must be the main tool for repairing our public finances."