The British Chambers of Commerce (BCC) has today called for all politicians to back a "national recovery plan" after warning that the UK economy faces "very serious recession" in the wake of dire manufacturing and services data.
The sentiment was echoed by the Royal Institution of Chartered Surveyors (RICS), which appealed to the government to step in to kick start the frozen mortgage market. This comes on a day of further job losses across the country.
The BCC today released its fourth quarter economic survey, which showed a "frightening deterioration in the UK economic situation" between October and December.
The survey recorded the worst quarter on record for manufacturing and services since it was first published in 1989. The BCC surveyed almost 6,000 businesses, which employ over 680,000 and found "domestic demand is plunging, exports are falling, and confidence is plummeting".
The balances for home sales and orders, employment expectations, investment, confidence and cash flow in the manufacturing sector were at record lows. The entire service sector balances also fell to historically weak levels. Despite falls in sterling in recent months, exports have failed to pick up, according to the survey.
David Frost, director-general of the BCC, said: "These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate."
He continued: "A clearly defined National Recovery Plan will need to be rolled out as soon as possible, involving all politicians." The BCC believes interest rates should be cut to zero in the coming months, and a fiscal stimulus and quantitative easing - or printing money - should be introduced.
Also today RICS called on the government to guarantee new issuance of residential mortgagee-backed securities after it revealed today that the number of transactions carried out by its members had fallen to a record low in December.
RICS' UK housing market survey, published today, found that the average number of transactions per agency had fallen from 10.6 in November to 10.1. This is the lowest figure since the survey began in 1978.
The survey pointed to a slight rise in new buyer inquiries after the Bank of England slashed interest rates and asking prices fell. "Buyer interest is now at levels not seen since 2006 but without mortgage finance the housing market is at a standstill and transaction levels at an all time low," RICS Ian Perry.
"The Government must act now to ensure that order is restored to the current chaos." He predicted a plunge in prices to new lows, a rise in repossession and negative equity."
Howard Archer, chief UK and European economist at IHS Global Insight, said the outlook for the housing market remains bleak. He forecast that house prices will continue to fall a further 32 per cent from the August 2007 peak of £199,612 to finish at £135,912 at the end of 2009.
There was further bad news for British jobs as 367 workers were made redundant yesterday by Waterford Wedgwood, the luxury glassware and china maker.
Construction equipment group JCB announced it was to cut 684 jobs with a further 1,000 under threat. This comes after a key supplier to Findus, the maker of fish fingers and other frozen goods, went bust. The plant run by Newcastle Productions employs 420 people. Land of Leather also collapsed, which put 800 jobs under threat.
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