Recent information has shown that the manufacturing industry is slowing down, and this is an indication that Britain might be heading back into recession. The economy barely grew in the last quarter and the thought of going back into recession is unwelcome. The British Chambers of Commerce are responsible for representing around one in every six of workers in the country and they have recently commented that the latest steps taken by the Bank of England are probably not enough to avoid a second recession.
Concerns about global demand, and the state of the Euro, have meant that people are fearing, more than ever, the risk of a double dip recession. John Longworth is the director of the BCC and he has commented, “the government are going to have to make some serious policy choices, we are facing a real risk of a double-dip recession and the government will have to act if they want to avoid this.”
The government is trying to promote economic growth by keeping interest rates at a very low rate. However the economy has still stagnated for around a year. High inflation rates that are above people’s wages have meant that living standards are being squeezed more than ever. The BCC has said that to stimulate growth the government is going to have to take radical steps.
The latest figures from the Institute for Fiscal Studies has said that over the next two years income is going to fall by around 7%, in real terms. Markit chief economist Chris Williamson has said, “there are serious concerns that the fourth quarter may be a contraction in the economy, and the latest figures mean there is greater state of gloom about the UK economy.” David Kern is the chief economist of the BCC and he has said, “it is likely the figure will be revised down from 1.1% to 0.9%, for year on year growth.”
The balance of the domestic manufacturing has fallen significantly and is at its worst level and early 2010. The services sector has also seen sales fall to 0% growth, this was a 10% in the last quarter. The fact that manufacturing is growing at such a slow pace has meant government hopes that exports would help boost the economy have been dimmed. Fortunately, the oil and gas industry saw growth, but this is a volatile industry and did little to help the overall trend downwards.
Retail sales also grew in September, figures show that there has been a 0.3% growth on last year’s figures. This is particularly good news when you consider the forecasts were for a 1% fall. Spending growth however has been below inflation according to Stephen Robertson who is head of the British Retail Consortium, this actually means that people are buying less than they were in the previous year.
In general, economists are agreeing that the outlook for the UK economy is not good, exporters are facing barriers and consumers are spending less because of drops in disposable income.