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8 October 2008 UK ‘already in recession’, warns business group

The UK domestic economy is ‘already in a recession’ and now under ‘immense pressure,’ a business lobby group has warned.

A quarterly survey of 5,000 businesses by the British Chambers of Commerce (BCC) reveals that ‘virtually all’ key sectors have deteriorated and many are in negative territory.

The BCC also said it expects unemployment figures to rise by 350,000 by next year.

Whilst Britain is not ‘technically’ in a recession – defined as two consecutive quarters of negative economic growth – the findings will make unpleasant reading for troubled Chancellor Alistair Darling.

BCC Director-General David Frost is now urging the Government to take action to prevent further economic decline. ‘We are clearly in a very difficult economic period but it is important that we retain a sense of proportion,’ he said.

‘The Government needs to say that business taxes will be cut. The Bank of England needs to cut interest rates immediately and politicians need to get behind our businesses in these challenging times.’

The news comes as Darling today unveils the Government’s £50 billion rescue package to shore up Britain’s struggling banks and revive the ailing economy.

The Chancellor’s decision to part-nationalise Britain’s banks follows unprecedented falls on FTSE 100 index, which on Monday slumped to its worst daily decline for more than two decades.