Economy will steer clear of recession, say business leaders

The British Chambers of Commerce said today that Britain would avoid recession, estimating that gross domestic product grew by 0.3% in the first three months of the year.

But the business group’s quarterly poll of businesses, published today, found ‘encouraging signs of growth’ in the economy, although the pace of the recovery remains slow.

A survey of 7,981 businesses belonging to chambers across Britain also revealed that concerns about inflation decreased in the first quarter.

Confidence among businesses has increased compared with the previous quarter – the last three months of 2011 – but remains weak by historical standards.

BCC chief economist David Kern said the survey pointed to a ‘welcome but modest improvement in the economic situation’.

He added: ‘The UK economy will likely avoid a recession, though the erratic construction figures may distort the Office for National Statistics’ estimate. On the basis of this survey, we are now predicting quarterly GDP growth of 0.3% in quarter one 2012, in line with the Office for Budget Responsibility’s recent forecasts. However, growth is likely to remain low for some time, and a return to a more normal pace is unlikely until 2013.’
The chamber’s prediction for total growth in 2012 is 0.6%, lower than the 0.8% OBR forecast. Kerns said this was due to concerns about the eurozone and because increases in oil and food prices since January might keep inflation higher than predicted.

BCC director general John Longworth added: ‘The UK economy is still facing huge challenges and the recovery is much too slow. The UK has the potential to recover, but to achieve that the government has to set businesses free to grow.

‘While the government has promised positive changes that will help businesses, improved transport infrastructure and deregulation for example, they are yet to become a reality. These medium- and long-term measures must be brought forward to help businesses grow and create jobs.’