BCC, IMF reports show UK economy already in recession

The latest quarterly survey released by the BCC, based on 5000 business responses, shows that the UK is now in a worsening recession.

The British Chambers of Commerce Quarterly Economic Survey (Q3 2008) results were particularly bad, following a shaky set of results in the second quarter of 2008. With the domestic economy now under great pressure, the BCC called for a half point interest rate cut earlier this week - and the Bank of England duly delivered yesterday.

Some of the key findings from the quarterly survey as as follows:

Key BCC Results

• Domestic balances, sales as well as orders, have moved deeper into negative territory, for both manufacturing and services
• All firm sizes, in both sectors, show negative Q3 domestic balances, a disturbing and unusual situation
• Manufacturing export balances plummeted in Q3
• There has been a collapse in confidence across sectors
• All confidence balances, turnover as well as profitability, fell to record lows in Q3, for both manufacturing and services
• Cashflow balances remain negative in this quarter
• There has been a recruitment dip across sectors
• Investment balances in plant and machinery moved into negative territory for both sectors

With dramatic economic events taking place each day, key reports such as this one seem to be superseded with even gloomier news. Yesterday, as most major central banks cut interest rates, the International Monetary Fund (IMF) warned that most industrialised nations were nearing, or already in recession. The IMF expects the UK to suffer a recession similar to that of the early 1990's - with unemployment predicted to jump sharply to 6% next year.

Interestingly, the Telegraph reports that: "If Alistair Darling follows suit in the forthcoming Pre-Budget Report he will have presided over the biggest ever cut in an official UK economic growth forecast, since Chancellors started putting together annual projections in the 1970s."