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Last Updated: Wednesday, 16 April, 2003, 23:06 GMT 00:06 UK
Alarm as UK recovery stalls
Inspecting a BMW Mini component
Manufacturers are continuing to suffer
The fragile recovery experienced by British businesses at the end of 2002 appears to have evaporated.

Figures from the British Chambers of Commerce's (BCC) quarterly economic survey showed significant decline across most areas of the British economy.

Property sales, export deliveries and employment all worsened for both the manufacturing and service sectors.

BCC director general David Frost said: "The sharp deterioration in business conditions, particularly the export market, is alarming."

'Significant slowdown'

The BCC survey is strong on grassroots opinion among smaller businesses - usually the first sector to feel the onset of a recession.

"The last quarter showed a bit of improvement - there was a glimmer of hope for manufacturing - but that was clearly a blip.

"All the indicators this quarter are extremely gloomy," Mr Frost told BBC News Online.

He added: "The economy has not fallen off a cliff in the way it did 12 years ago, but we are certainly experiencing a very significant slowdown."

Interest rates

The gloomy results were partly down to uncertainty surrounding the war in Iraq.

The next six months will be crucial, Mr Frost said, to find out if there is to be a prolonged slowdown.

But businesses had been hit hard by the recent increase in National Insurance contributions.

And further cuts in interest rate, while needed, might not be enough to haul the economy out of the mire, he added.

Export orders

The BCC is calling on Chancellor Gordon Brown to cut the burden of tax and red tape on businesses, to at least allow "mediocre growth" to continue.

"We want assurances that there will be no further increases on taxation.

"We want the government to understand the real difficulties that are being faced," Mr Frost told News Online.

Export order growth was one of the most worrying indicators in the BCC survey, showing a considerable drop.

The survey also showed UK manufacturing sales in the first quarter of 2003 dropped to 2% growth from 19% growth in the previous quarter, while orders deteriorated and moved into negative territory.

Small businesses

Manufacturers' investment also weakened and confidence levels fell slightly for turnover but improved for profitability.

For service companies, the BCC said first quarter figures were very downbeat.

Investment and confidence levels weakened more sharply than for manufacturers.

The BCC, which represents 135,000 firms, warned the climate was particularly tough for businesses employing fewer than 19 people.

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