Growth in the UK economy is ‘too weak’ for a sustainable recovery, says a report by the British Chambers of Commerce (BCC).
According to its second quarterly economic survey for 2012, UK GDP has shown little overall change. However, exporting activity in both the service sector and manufacturing firms showed a small improvement, indicating that businesses are turning to exporting as a source of growth.
Surveying almost 8,000 small and medium sized enterprises (SMEs), the report found that while businesses are growing the pace of activity was ‘inadequate’ and too slow. Positive business balances are still below levels seen before the 2007 recession.
Meanwhile, the BCC painted a mixed picture regarding employment, with manufacturing firms not planning on hiring staff and the service sector expected to take on new employees.
The BCC is now urging the Government to take urgent measures to boost business growth, including the creation of a state-backed business bank and by pumping money into infrastructure projects.
The BCC’s director general John Longworth said: “Growth cannot wait. The government must take an imaginative and brave approach to stimulating the economy and helping businesses thrive. Headline grabbing u-turns on fuel duty are not enough to get the economy back on track.”
David Kern, chief economist for the BCC warned that the economy could face ‘major’ upcoming obstacles from continuing austerity measures and problems from the Eurozone.
“With the Diamond Jubilee reducing the numbers of days worked in Q2, and early estimates showing renewed falls in the erratic construction sector, it is possible that official figures for Q2 2012 may show negative UK GDP growth for a third quarter in a row,” he said.
The BCC also questioned the accuracy of figures from the Office for National Statistics (ONS) in by which the UK economy is officially measured by. While the BCC believes that growth occurred over the second quarter, many economists believe that figures from the ONS released at the end of the month will indicate a decline.
David Kern added: “There are still unresolved questions about the ONS estimate, but regardless of that it is clear that the UK economy faces major challenges, and growth is inadequate.”
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