The British Chambers of Commerce (BCC) today added its voice to the growing chorus of concern about Britain's faltering economic recovery.
The body, which speaks for privately owned businesses, warned the pace of the recovery had slipped back during the second quarter of the year, and that while the Government's austerity drive was necessary, ministers had failed to come up with a credible plan for generating economic growth.
The BCC said it believed the British economy had grown just 0.3 per cent during the three months to June.
The body's director-general, David Frost, explained that while the coalition Government had begun to restructure the economy, not enough progress had been made.
"Our economy is out of balance: the public sector is too large and the private sector is too small; we do not export enough goods and services, meaning we run up continual trade deficits," he said.
"We accept the need to persevere with painful measures to cut the deficit. But the Government must move beyond the rhetoric of growth, and introduce radical reforms to help businesses export, invest and create more jobs."
The warning is based on a survey of 6,600 BCC members across the country, with the majority, in both manufacturing and services, warning that the domestic market remained sluggish and that they were therefore prioritising exports.
The manufacturing sector's export performance remains strongest, the BCC said, though sales are beginning to slip back compared to imports, while services companies are also struggling. On business confidence, BCC members said they felt slightly more optimistic than in the first quarter of the year, though confidence has yet to return to the levels seen at the end of the recession in the second half of last year.
Worryingly, that lack of confidence is reflected in the employment market, where companies said they had barely added any staff at all over the second quarter of the year.
However, there is now some optimism that recruitment may increase during the months ahead.
BCC members also warned that cost pressures were continuing to bite, with a third more businesses saying they felt compelled to raise prices over the next quarter than not.
David Kern, chief economist at the BCC, said: "Recent economic data suggests that the rebalancing of the economy towards net exports is still not strong enough.
"With the international situation becoming more uncertain, there are worrying signs that global growth is set to slow, and this will add to the challenges facing UK exporters."
Mr Kern added that the economy remained in desperate need of support from policymakers.
"To minimise dangers of a setback, the Government must implement more growth-enhancing policies that will enable private-sector firms to increase productivity and drive the recovery forward," he said. "On its part, the Bank of England's Monetary Policy Committee must postpone premature interest rate increases while fiscal policy is still being tightened and wage pressures remain weak."
The BCC's concerns were underlined by a separate survey from accountancy firm Deloitte, which said today the confidence of finance directors at Britain's largest companies was now at its lowest level since the period after the collapse of Lehman Brothers in September 2008. A third of finance directors now think there is a chance of a double-dip recession.Reuse content