Businesses 'see slowdown but no recession'

News Article - 14 January 2008
Category:

A survey by the British Chambers of Commerce (BCC) is expected to reveal that business growth was down in the last quarter, reports the Sunday Times.

The newspaper claimed that the survey will show a slowdown in areas such as productivity and investment but not a full-on recession in the economy.

Both businesses and the public claimed they expect higher inflation in the near future, although slowdowns in growth could prevent companies from transferring the costs.

However, the newspaper added that expectations of increases in inflation but weak business performance will prove a problem for the Bank of England when making decisions over the base rate.

David Kern, BCC economic adviser, claimed that action needs to be taken soon, adding: "Delaying a cut could worsen the downturn in the economy."

Last week, the Bank voted to retain the current base rate of 5.5 per cent after reducing it by 0.25 per cent in December.

Article keywords: Higher interest rates have failed to dampen the confidence of many small and medium-sized enterprises (SMEs) in the UK, a study has shown.<br/><br/>Research by audit firm KPMG has highlighted that 64 per cent of SMEs are optimistic about the future of business over the coming 12 months, marking the highest level of confidence since 2004.<br/><br/>However, Mel Egglenton, KPMG's head of UK middle market, stated that there was &quot;an obvious concern among those questioned that interest rates are going to continue to increase&quot;.<br/><br/>Mr Egglenton added that it was vital to realise that the survey was of business people rather than economists and so results were not based on macro-economics but on the strength of order books.<br/><br/>Rising energy costs may have caused businesses to struggle in the past, making them more robust and renewing their optimism for the year ahead, he concluded.<br/><br/>Meanwhile, the latest UK Business Confidence Monitor from the Institute of Chartered Accountants in England and Wales highlighted a rise in optimism of +7.4 this quarter.<br/>

---

More industry news

• Think tank warns UK may have already slipped back into recession
• Growing demand for HR staff in technology and international sectors
• Boosting business growth a ‘priority’ to avoid Eurozone slowdown
• HMRC launches alternative disputes pilot scheme this week
• December employment statistics disregard gloomy recruitment predictions
• Eurozone manufacturing PMI shows modest improvement
• UK scores highly for economic governance by ratings agency
• Government launches two-year project focusing on manufacturing sector
• Burden of regulation on UK businesses ‘too high’

Back to news home page »