In their latest economic survey, the British Chambers of Commerce are optimistic about the UK’s ability to avoid a double dip recession even though the rate of growth remains weak. Further, there will need to be ‘forceful measures’ taken in order to push the recovery into motion and this is after forecasting just a 0.6% growth for 2012.
A large portion of the pessimism towards a speedier recovery is due, in large part, to the rising costs of food and oil. This means that inflation will not fall quite as quickly as had been previously forecast. Also, the continuing debt crisis in the eurozone is hitting confidence not only abroad but in the UK as well.
David Kern, chief economist for the BCC stated that because he expects domestic demand to remain low and the number of those unemployed in the UK to reach at least 2.9 million, it is important to do everything possible to stimulate growth. Also, he wants efforts made to empower job creation in the private sector.
Government, according to the BCC, should take what they call ‘radical’ steps by creating a bank that is backed by the state so that lending can be boosted for SMEs. At the moment, small and medium enterprises are finding it difficult to qualify for loans based on conventional banks’ reluctance to part with money for anything other than well established large corporations.
The survey conducted by the BCC polled 8,000 businesses which this year, surprisingly, showed improved confidence and books that have shown a gain. Even so, the services sector that is traditionally considered to be the UK economy’s powerhouse, is still sluggish and much weaker than had been forecast. The BCC’s forecast is weaker than the one released by government at the OBR, lower by some degree than their projection for an eight percent growth this year.