Economy stagnating in Q3 of 2011, warns BCC

The British Chambers of Commerce (BCC) has warned that the UK economy has deteriorated in the third quarter of 2011 and is showing signs of stagnation.

The forecasts for economic growth have been downgraded a number of times this year, with growth for 2011 now expected to be just 1.1%, down from a predicted 1.9% at the start of the year.

The biggest problem highlighted by the BCC for the 6,700 businesses was inhibited cashflow.

With lower levels of cashflow, businesses are less able to take advantage of discounts for quick payments and benefit from economies of scale, amongst other things, which bring down costs and inspire confidence to be able to commit to bigger deals and growth/expansion plans.

Thus, with ongoing cash flow issues, business confidence, export levels and investment in plant and machinery were all said to have weakened in the last few months.

The BCC’s director general, John Longworth, was adamant that priorities must be shifted in the economy.

But he was still confident that a double-dip recession could be avoided, “The pace of the UK recovery will remain slow. We can avoid a recession but this relies on the government making some tough policy choices.”

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