Is recession looming for the UK?

Amongst the terms that have been banded around the financial news over recent months are ‘global credit crunch’ and ‘recession’ and according to one recent report the nation could already be on the brink of recession, with industry officials sending out stark messages to government officials relating to the economic downturn and the crisis that is facing the country.

A recent business survey indicated that the UK economy was a ’serious risk’ of falling into recession within a matter of months. The figures from the report showed that business had tumbled amongst small and medium sized businesses in the service and manufacturing sectors over the past three months. The survey was carried out by the British Chambers of Commerce and involved surveying around five thousand of its member firms.

David Kerns from the BCC recently said: ‘We are now facing serious risks of recession. The outlook is grim and we believe that the correction period is likely to be longer and nastier than expected.’

The BCC added that the service sector has been particularly hard hit, and the number of firms that have reported falling orders has exceeded the number reporting increased orders for the first time since 1990.

Another official from the BCC said: ‘I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country. To put more pressure on business would not only restrict business growth and hit the consumer hard, it would crush further what our economy is based on - confidence.’

A number of businesses have reported falling orders and business levels, but some economists are still hoping that the UK will manage to avoid recession. However, with many firms already cutting back on jobs, such as housing developers and builders, estate agents, and those in jobs related to housing, the future certainly looks bleak, according to many officials.

One shadow Treasury official said: ‘This survey will only add to British businesses’ concerns about the economy. Instead of being supported in these difficult times, they are facing more tax hikes because Gordon Brown failed to fix the roof while the sun was shining.’

As if the picture was not already bleak enough some industry officials have predicted that it could actually take as long as twenty years for the housing market in the UK to recover.

One official said: ‘House prices are expected to be below their August 2007 peak in a further 10 years’ time.’

An official from Capital Economics concluded: ‘The industrial section of the economy is already in recession. This means that all parts of the economy appear to be heading down at the same time, bringing the UK economy even closer to recession.’

Howard Archer from Global Insight added: ‘The bad news on the UK economy is coming thick and fast at the moment and the downturn appears to be depending appreciably.’

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