Worst of the recession 'is over'
The worst of the UK's recession is over, according to the British Chambers of Commerce (BCC) business group, but talk of a recovery is premature.
Its report, based on a survey of 5,600 companies, found there had been "welcome progress" in confidence levels between April and June.
But the BCC still expects unemployment to reach 3.2 million by 2010.
Separately, official data showed that manufacturing output fell 0.5% in May. Analysts had forecast a rise of 0.2%.
The Office for National Statistics (ONS) said the monthly fall was driven by a 2% decline in the paper, printing and publishing industries.
Nurture confidence
The BCC survey said that, although manufacturing had seen greater improvement than services, the sector still remains in "a worse condition overall". The group warned that the increase in confidence was fragile.
Last week, the ONS sharply revised its GDP data for the UK, saying the economy shrank by 2.4% in the first quarter of 2009, compared with its earlier estimate of a contraction of 1.9%. With these heavy revisions, the BCC said it was far too early to say that recovery is secure.
It added that without continued focus on limiting the impact of the recession, there was still a risk that the economy could "drop off suddenly" and the UK could be heading towards a "W-shaped" recession.
"It is absolutely vital that the improvement in business confidence is nurtured," said BCC director general David Frost.
"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."
He added that the proposed increase in National Insurance contributions in 2011 was a "tax on jobs" which should be scrapped.
He also called for banks to continue lending and said that businesses expect the government to sort out "the appalling state of the public finances".
Signs of recovery?
The National Institute of Economic and Social Research (NIESR) has estimated that the UK economy resumed growth in April and May after a sharp decline of 1.9% in the three months to March.
Martin Weale, director of NIESR, has said that he expects the official figures to show "either that the recession is over or that it is close to over" in the second quarter of 2009.
And the CBI has predicted that the economy will see a return to growth of 0.7% next year.
The government has forecast the economy to grow by 1.25% in 2010.
Source : bbc.co.uk Tuesday 7th July 2009
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