BCC director-general: Firms 'need more support' to maintain fragile recovery

BRITISH Chambers of Commerce director-general David Frost has demanded that the UK government gives more help to exporters as a report out today warns that Britain's economic recovery remains "fragile".

The BCC accused the coalition of not offering businesses the same level of support as the UK's major competitors recieve and said it needs to do more to stimulate economic growth.

Credit insurance is at the heart of the chambers' demands to help protect against the risk of customers not paying bills.

The BCC wants Downing Street to encourage more businesses to use the Export Credits Guarantee Department (ECGD), after its research found two-thirds of firms had never heard of the agency. Falkirk-based bus builder Alexander Dennis last month hailed the work of the ECGD in helping it to secure a 22 million deal with New Zealand's Swift Transport. Alexander Dennis said the insurance allowed ANZ National Bank to lend Swift cash to buy 118 buses.

BCC policy director Adam Marshall told The Scotsman: "Trade finance and credit insurance grease the wheels of Britain's export machine.

"As we have repeatedly argued over the past three years, that grease has been in short supply.

"This has left many small firms unable to start trading in new markets or increase the amount they export."

His comments came as the BCC's quarterly economic survey warned that the UK's economy was "out of balance" and that, as well as making public sector cutbacks, the UK government should be making more of an effort to grow the private sector.

While the BCC still expects the UK economy to have grown during the three months to 30 June - in contrast to other bodies, with Scotia Capital revealing on Friday it believes there is a "significant chance" the economy contracted during the second quarter - the body said there is "no room for complacency".

Frost added: "We accept the need to persevere with painful measures to cut the deficit. But the UK government must move beyond the rhetoric of growth, and introduce radical reforms to help businesses export, invest and create more jobs."

Frost's warning came as a survey from accountancy firm BDO showed that business confidence in the manufacturing sector has plummeted to a two-year low after slack domestic demand and fears over how the eurozone debt crisis could affect orders.

Neil Craig, lead partner at BDO in Scotland, said: "Such a marked slump in business confidence in the manufacturing sector is a real concern given that it has provided the propulsion for the economic recovery so far.

"The weakness of the pound has failed to generate the hoped-for returns. Perhaps this is because the benefits have been offset by higher input prices."

Optimism among chief financial officers has also fallen to a two-year low, according to accountancy firm Deloitte's survey of more than 130 CFOs at FTSE 100, FTSE 200 and larger private companies.

The drop in confidence was the sharpest since the collapse of US investment bank Lehman Brothers in September 2008, which triggered the financial crisis and ensuing recession.

Ian Steele, senior partner for Deloitte in Scotland, said: "The squeeze on UK consumer spending power seems to be weighing on corporate sentiment."

Today's Scottish purchasing managers' index (PMI) survey from Bank of Scotland offered a glimmer of hope, with activity in Scotland's private sector economy expanding at a "solid pace".

The PMI rose to 53.3 in June from 52.2 in May, with growth in manufacturing sector output "above the long-run series average", and the services sector expanding at a faster pace.