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BCC study points to economic slowdown during Q3 2010
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Research conducted by the British Chambers of Commerce (BCC) has pointed to a significant slowdown in the UK economy during the third quarter of 2010.
The organisation claims that manufacturers' profitability confidence dropped by three points to reach +23 per cent, while cashflow balances fell by one percentage point to zero per cent.
In addition, the service sector home orders balance was also hit between July and September, declining by ten points to one per cent. All key service sector indicators, such as employment expectations and investment, slowed during the three-month period.
The negative indicators come on the back of an unusually strong second quarter of the year, for which the Office for National Statistics reported 1.2 per cent economic growth.
And with the government's Comprehensive Spending Review due to be published next week, concerns have been raised over the general outlook for the business community over the coming months.
With austerity measures set to be implemented, the BCC argues that forceful action must be taken by the government and Bank of England to reduce the dangers of a major economic setback.
David Frost, director-general of the BCC, said the results of the study were "disappointing", particularly for the service sector.
He said that wealth-creating businesses "must be supported" for Britain to achieve a sustainable recovery.
"Businesses must be given the freedom to create jobs and wealth, exporters must be supported more actively, and the burden of red tape on employers should be reduced or scrapped wherever possible," Mr Frost claimed.
Adding his view, BCC chief economist David Kern said it is important not to overstate the gloom, since growth remains in positive territory and a new recession can be avoided.
"But the UK will face huge challenges over the year ahead," he stated.
"With worrying signs that the global economy may slow over the coming months, and with the public sector's share in the UK economy set to shrink, it is vital to take forceful steps to sustain the recovery and support the private sector."
Posted by John Lynes
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