In the fourth quarter of 1998, service sector firms experienced their lowest growth in domestic sales and orders for six years, according to the latest British Chambers of Commerce survey. Calling for another half point reduction in interest rates, Dr Ian Peters, the BCC's deputy director general, said: " The economic outlook is now finely balanced with the odds on recession or recovery too close to call."
The weak service sector figures - coupled with Wednesday's disappointing retail sales data - increased speculation that today's key GDP numbers will show that UK economic growth ground to a halt in the last quarter of 1998. Richard Iley at ABN Amro said: "This survey confirms that fourth quarter GDP will be soft".
However, there was a glimmer of hope for UK manufacturers - a slight improvement in both manufacturing confidence and sales overseas, after a sustained period of decline. Dr Peters said: "Recent cuts in interest rates and improved export prospects have given manufacturing a fillip."
Separate figures from the consultancy firm NTC Research also suggested recent rate cuts had stemmed the slide in confidence. The NTC Consumers' Industries Indicator increased marginally for the second successive month, following an up turn in both consumer confidence and the output of consumer industries.
Meanwhile new borrowing figures revealed that net mortgage lending by the major banks rose by a record pounds 1.2bnin December, a surge attributed to a combination of refinancing and a shift in market share.
Total sterling lending to the M4 private sector rose by a larger-than- expected pounds 5.5bn in December but analysts said that these figures had few policy implications.Reuse content