The BCC has thrown its hat into the ring with the CBI, OECD, OBR et al to pin the tail on the UK’s economic donkey for Q1. In its Quarterly Economic Survey, out today, a 0.3% growth figure is bandied about, helped by a manufacturing and services recovery, but hindered by rising oil and raw materials prices. Well, it’s better than the 0.3 fall in the previous quarter, but a long way from a full recovery.
Exports are broadly up, although still hovering below pre-recession levels. Domestic consumer demand has also recovered slightly too. And investments in plant and machinery is slowly being scaled up again after a year of belt-tightening.
‘Threats of a disorderly disintegration of the eurozone have receded,’ states the report, and ‘fears of a renewed domestic recession have eased.’ But, lest you let the good news go to your head, the BCC adds: ‘UK growth remains weak and inadequate,’ and ‘huge challenges still face our economy in the years ahead.’
The government is not doing enough to spur growth, the report goes on. Cutting the deficit is all well and good, but take the shears to red tape while you’re at it, recommends BCC chief economist David Kern. ‘With domestic demand remaining weak and unemployment likely to increase to approximately 2.9 million over the next year,’ he says ‘every effort must be made to boost growth and empower the private sector to create jobs.’
BCC growth forecasts for the whole year stand at just 0.6%. But despite the miniature figure, UK business leaders are still optimistic. According to the 8,000 firms taking part in the BCC survey, their blood is up, especially in manufacturing which has had the biggest confidence boost since this time last year.
What all these surveys prove is that the economy remains pretty static - no amount of arguing over a few tenths of a percentage in either direction will change that.
Of course, everyone has to root for growth right now. After six months of contraction, another dip would put the UK firmly in recession. Any green shoots are welcome, even if they are tentative. But make no mistake, we’re just a whisker away from recession, and everyone knows it…