The global economy is continuing to weaken, according to the latest survey by theOrganisation for Economic Co-operation and Development. The Paris-based OECD's monthly composite of leading indicators (CLI) fell for the fifth successive month in August, signalling a sharp slowdown in economic activity across the world.
The composite index for the 33 OECD member countries fell to 100.8, down from 101.4 in July. Any reading below 100 indicates output below long-term trend. The UK, Canada, France and Italy all now have a CLI reading in the 90s. Britain fell from 100.4 in July, to 99.7 in August, the seventh fall in as many months.
The United States, Germany and Japan remained above 100, but still registered falls on July. The OECD's warning follows a forecast from the International Monetary Fund last month that growth in advanced economies will slow to 1.6 per cent in 2011 and 1.9 per cent in 2012. Of the emerging Bric economies, only Russia registered a figure above 100, with China slipping into negative territory and India and Brazil falling further to 95.1 and 94.8 respectively.
The gloomy outlook for the UK economy in the OECD report is echoed by a new survey by the British Chambers of Commerce (BCC), which shows a weakening across the UK business sector. The BCC's latest Quarterly Economic Survey, based on interviews with 6,700 UK firms, shows a sharp deterioration in cash flow and investment. Exports are also under pressure, with sales for the last three months down for both manufacturing and services. The outlook for future orders was at the worst level since the third quarter of 2009.
General confidence is also sharply down. The BCC survey also shows that the number of manufacturing firms increasing their workforces is falling. John Longworth, the director-general of the BCC, said: "The results of our latest survey are concerning, but not entirely surprising. The survey shows the real risks facing the economy and the need for the Government to act now in putting business growth at the heart of all its policies."
Last week the Bank of England's Monetary Policy Committee announced that it would inject a further £75bn into the economy as part of its quantitative easing programme and the Bank's Governor, Sir Mervyn King, said Britain was facing its worst financial crisis in history.