Two reports are now confirming that the economy in the UK is slowing. The BCC (British Chambers of Commerce) reported that growth in the economy was seriously declined in comparison with the prior quarter. Business will face grave challenges in upcoming months, they warned.
The BCC stated as well, Bank of England’s MPC (Monetary Policy Committee) should take a hard look at whether more quantitative easing (QE) is necessary to release money in order to hold back the negative impact of government cut backs.
The BCC study further found that service sector businesses are in distress and failing. Their chief economist finds the poor performance in the service sector alarming because it is happening before the VAT rises to 20 per cent. He says that another recession can be avoided, but only if interest rates are maintained at record low levels.
The other report was from the BRC (British Retail Consortium) who warned that sales growth had slowed last month. It was half the sales rate the BRC had shown for August, which indicates a steady decline. There is also little evidence that consumers will carry forward costly purchases to overcome the January increase in VAT from just over 17per cent to 20 per cent.
They say that the MPC should consider increasing the QE program from £200 billion to £250 billion to aid the economy in coping.
The BRC report said that consumers are cutting more expensive purchases like kitchen and bathroom refitting and other home improvement items.