In a report from the British Chambers of Commerce (BCC), the UK economy has deteriorated in the third quarter and shown signs of stagnation. Cash flow is a concern for the 6,700 businesses surveyed in the report.
Downgrading Growth Forecasts
The BCC has downgraded its forecast for UK economic growth for the third tie, with a revision downwards to 1.1%, down from the 1.9% growth expected at the beginning of the year. Official numbers showed that second quarter growth was 0.1% rather than 0.2% as previously estimated. The Office for National Statistics had revised that number downward and also downgraded growth from the first three months from 0.5% to 0.4%.
This means that the 0.5% contraction seen at the end of the previous year was effectively balanced by the growth in the first half of this year. According to the BCC, domestic market, exports, confidence, cash flow, and investment in plant and machinery had all weakened over the last three months. Information released today showed unemployment to be at its highest level yet as well.
Manufacturing saw job creation falling with a small increase in the services sector, and little hope in either industry. “The pace of the UK recovery will remain slow. We can avoid a recession but this relies on the government making some tough policy choices. While it is imperative that the government perseveres with its deficit-cutting plan, there must be a significant reallocation of priorities within the overall spending envelope,” said director general of the BBC, John Longworth.
A separate survey from the British Retail Consortium (BRC) revealed that some retailers had difficulty with the hot weather at the end of September, with clothing sales suffering their largest drop in two years, due to retailers having autumn lines released.
However, the hot weather helped food sales, with people stocking up on barbeque food, and like-for-like sales increased 0.3% between last September and this one Food sales between July and September were up 2.1% with all other sales down by 1.4%.
The director general of the BRC, Stephen Robertson said the small improvement was good but that the economy would stay weak. “Spending growth is below inflation meaning customers are buying less than this time last year. And there’s no guarantee next month’s figure will be better,” he said.