In spite of signs of economic deterioration and forecasts of stagnation for the first quarter of 2012, a new recession is not a "forgone conclusion" according to the British Chambers of Commerce.
The Quarterly Economic Survey (QES), published yesterday, shows cause for concern in the new year as improvements made in 2010 and early 2011 appear cancelled out, but the figures are still better than those of the worst period of the last economic downturn.
Domestic demand is at a two year low, according to the survey, and confidence in the business sector is weakened. David Kern a Chief Economist at the BCC said in a statement:
"The results point to a worsening in the economic situation, with signs that the UK recovery is stalling. The survey shows stagnation in manufacturing and minimal growth in services in Q4 2011.
The job market is also unlikely to improve with businesses unoptimistic over recruitment outlook. Recent figures show unemployment is currently at a record high of 2.64million with the situation likely to deteriorate across 2012. Kern commented:
"A fall in employment expectations points to risks of rising unemployment over the next year. We are predicting an increase in the UK jobless total to 2.77 million by the end of 2012. Recession is still avoidable, but risks of a setback have increased. Most export balances are still positive. But the worsening international situation and the growing risks facing the eurozone will cause UK exporters difficulty.
The BCC called for government intervention to aid the business sector and promote new growth in a bid to avert a full recession. John Longworth Director-General of the BCC commented:
"A new recession is not a foregone conclusion. However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing eurozone crisis."
"A slowdown across the eurozone is inevitable, but Britain need not suffer a similar fate. We simply cannot afford to compromise on economic performance. The UK does have the potential to recover and make its way in the world. We have the talent, the energy, and the enterprise. All we need is an environment that puts business first."