By Daniel Hunter
The British Chambers of Commerce (BCC) have said that the UK economy returned to growth in the third quarter.
Based on its survey of 7,593 UK firms, the BCC says the economy grew by 0.5% between July and September, after three consecutive quarters of contraction.
The BCC said it did not agree with the Office for National Statistics' "gloomy estimation" that the UK has been in recession for the whole period.
But fixing the UK's finances will take longer than previously hoped, it said.
It called on the government for additional measures to boost economic growth, such as implementing quickly plans to create a "British business bank" as well as unlocking infrastructure investment.
"The job of repairing Britain's public finances will take longer to complete than initially planned," said BCC chief economist David Kern.
"Despite official estimates, we believe the economy is still growing, but it is slowing. We need immediate measures now to support confidence and investment, a radical long-term growth plan, and a continued commitment to deficit reduction."
The survey results show the following:
Business confidence and investment falls: The survey showed worsening confidence and investment levels from both manufacturing and services firms. For both measures levels are lower than long-term historical averages, and have not yet recovered to levels seen before the recession. Fewer firms are looking to invest in training and plant & machinery, and confidence in future turnover and profit has fallen to levels last seen at the end of 2011.
Recovery in exports has weakened: Previous surveys this year had shown strong results for exporters in manufacturing and services. While balances are still positive indicating growth, this quarter they fell to levels similar to Q4 2011, meaning export growth this year, has dropped back.
Domestic orders are weak and far below pre-recession levels: Balances measuring domestic activity have fallen on the previous quarter. In both manufacturing and services, balances for domestic orders for the last three months have fallen, with the balance figure only slightly above zero. More worryingly, the results point towards a contraction in the future, with the forward-looking home orders balances in negative territory. The domestic balances are higher than those seen in 2008 and 2009 during the recession. However, they remain lower than their long-term historical averages, and far below pre-recession levels.
Firms less confident in taking on staff: The figures measuring whether firms have or are likely to take on new staff have also fallen in the last quarter. Asked whether they had taken on staff in the last few months, the balance of manufacturing firms hiring fell to +11%, and for service firms declined one point to +9%. The balance of manufacturing firms looking to increase headcount in the next few months fell twelve points to +1%, and in services fell 3 points to +9%.
Companies reported cashflow problems: Balances measuring cashflow (the movement of cash in an out of a business) remain weak, and were in negative territory in both sectors. The manufacturing cashflow balance fell 6 points, to -4%, while services cashflow fell 3 points, to -4%.
Join us on