‘Worst of recession is over’

The British Chambers of Commerce Economic Survey for Quarter 2, 2009 has found that the worst of the recession may be over, according to this report from the Retail Bulletin.

5,600 companies provided data for the report which states that progress has been made in the service and manufacturing industries. The data measures ‘turnover confidence’, which is now in positive territory for the first time since the end of last year. ‘Turnover confidence’ has risen to +2 for manufacturing firms – up 40 points from -38 in Quarter 1. Employment expectations also grew in Q2.

However, the report also found that most measures were still in a poor condition, while the British Chambers of Commerce said it expected unemployment to hit 3.2 million in mid 2010.

The organisation warned that action must continue to be taken by the Government to ensure the recovery doesn’t stall: “These results are sending Gordon Brown and Alistair Darling a strong message from the business community,” said David Frost, British Chambers of Commerce director general. “It is absolutely vital that the improvement in business confidence is nurtured.

“Our economy is based on confidence, and wealth-creating businesses need to know they will be given the freedom and flexibility to drive the UK out of recession and into a sustainable recovery.

“The government needs to think long and hard about its policies on taxation and red tape, which threaten to stifle growth and employment. The planned increase in National Insurance contributions is nothing more than a tax on jobs and it should be abandoned immediately.

“Signs of improvement in the economy cannot be an excuse for the government to start increasing business tax as a remedy for the ill health of the nation’s finances. Risking any fragile gains would be a huge mistake.”

The BCC’s chief economist stated that the worst of the recession had passed: “The pace of decline in the UK economy is clearly moderating,” added David Kern. “The worst phase of the recession is over, but serious downward pressures persist across all sectors and regions. Most key balances are still in negative territory and remain weak by historical standards. Recovery is now possible but it is not yet secure.

“Further corrective measures are still needed to support the economy. The marked improvement in confidence, albeit from exceptionally low levels, is welcome. However, these recent gains can only be sustained if the economy continues to stabilise and the recession ends.”