'Huge risks' to recovery, Britain's business chiefs warn

Chambers of commerce and engineering employers call for more government help

The economy faces "huge risks" as it inches towards a recovery "where the risks of a relapse are high", two of the nation's leading business organisations warn.

The British Chambers of Commerce and the Engineering Employers Federation stress the "challenges" facing companies as they emerge from the worst slump in the three-quarters of a century. They agree with the Government that the economy will start growing by again next year – but are much gloomier about how strong and sustained it will be.

Releasing its latest Economic Forecast report, the British Chambers of Commerce (BCC) said that the country faces a GDP decline of 4.3 per cent this year, staging a modest return to GDP growth in 2010 and 2011 of 1.1 per cent and 1.9 per cent respectively.

The BCC sees unemployment hitting the 3 million mark by the middle of next year. They also urge the Bank of England to extend its programme of quantitative easing.

Currently the Bank's Monetary Policy Committee is committed to a £175bn boost, and will probably announce no change in policy at the end of its next meeting on Thursday.

David Kern, chief economist at the BCC, said: "Sustaining the recovery will be very challenging and the risks of a relapse are high.

"The UK economy faces serious challenges that could limit the pace of recovery in the next few years, including: overly indebted consumers, high unemployment, a fragile banking sector, persistent weakness in bank lending, weak growth in the eurozone, and most importantly, the need to slash government borrowing and curtail debt. These problems will inevitably dampen UK growth prospects for a considerable period."

Both output and new orders have made gains in the last three months, compared with the weakest conditions on record in the earlier part of the year, the latest quarterly survey from the Engineering Employers' Federation (EEF) says. Although the balance of companies reporting positive output and orders shows the majority of respondents are still struggling, the response is the most positive since the end of last year. And predictions for the coming three months come in at a relatively upbeat score of minus two.

Steve Radley, the EEF's chief economist, explained: "The overall message is that things seem to have stabilised ... But there is nothing to suggest we are on the verge of a strong recovery in manufacturing, and there isn't yet a feeling of confidence coming back."

The accountancy firm BDO Stoy Hayward, which helped to compile the report, said that industrial recovery is "not imminent".

One of the biggest worries is that investment intentions remain particularly negative. But there are indications of a revival in sentiment in the longer term. The accountancy firm PriceWaterhouseCoopers' Enterprising UK 2009 survey has found that three-quarters of "defiant" business people predict that their situation will improve or stay the same in the next 12 months, "and the level of optimism increases significantly with time".

The EEF is calling for an extension to the car scrappage subsidy scheme: "There is a good case for looking at phasing the scheme out gradually," Mr Radley said. "For the benefits it would bring for a key sector of the economy and its supply chain, the Government would be looking at a pretty modest expenditure."

Life and Style
Customers can get their caffeine fix on the move
food + drink
Life and Style
techCould new invention save millions in healthcare bills?
Voices
Mosul dam was retaken with the help of the US
voicesRobert Fisk: Barack Obama is following the jihadists’ script
Arts and Entertainment
Loaded weapon: drugs have surprise side effects for Scarlett Johansson in Luc Besson’s ‘Lucy’
filmReview: Lucy, Luc Besson's complex thriller
PROMOTED VIDEO
News
peoplePamela Anderson rejects ice bucket challenge because of ALS experiments on animals
Life and Style
food + drink
Arts and Entertainment
tvExecutive says content is not 'without any purpose'
News
A cleaner prepares the red carpet for the opening night during the 59th International Cannes Film Festival May 17, 2006 in Cannes, France.
newsPowerful vacuum cleaners to be banned under EU regulations
Arts and Entertainment
tvSpielberg involved in bringing his 2002 film to the small screen
Sport
sportLeague Managers' Association had described Malky Mackay texts as 'friendly banter'
News
A polar bear’s diet is rich in seal blubber and half of its own body weight is composed of fat
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
peopleCareer spanned 70 years, including work with Holocaust survivors
News
people
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
News
London is the most expensive city in Europe for cultural activities such as ballet
arts
Arts and Entertainment
Jeremy Clarkson has rejected criticisms of his language, according to BBC director of television Danny Cohen
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Application Support - Enterprise Java, SQL, Oracle, SQL Server

£45000 - £55000 per annum: Harrington Starr: A well-established financial soft...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape