UK economy 'shows improvements'
April 13, 2006
Investment in plant and machinery has picked up, the BCC says
The UK's manufacturing and service sectors are showing signs of recovery but the upturn remains fragile, says the British Chambers of Commerce (BCC).
There have been improvements... but confidence is not great," the BCC said in its latest quarterly survey.
The BCC said the recovery in the UK economy must also be backed by moves to support employment and boost exports.
The rise in unemployment announced this week, with the jobless figure now up to 1.56 million, also concerns the BCC.
'Tentative' recovery
"The recent progress shown by our quarterly survey is from a low base, and follows a marked deterioration in the first three quarters of 2005," said BCC director general David Frost.
The survey found that the manufacturing sector recorded increases in its quarterly balances for home sales and orders, export sales and orders, employment expectations, and plant and machinery investment.
But Mr Frost said manufacturing had "persistently failed to sustain a recovery" and that recent signs of an upturn in manufacturing were "very tentative".
Mr Frost added that 100,000 a jobs a year continued to be lost in manufacturing.
He also said the improvement in the service sector had come from a low base, and that its prospects remain uncertain.
Flexible approach
At the same time as trying to support the manufacturing and service sectors in the UK, the BCC is also looking for greater stimulation of exports.
"Exports have grown, but we must grow them even more," said Mr Frost.
"Companies that want to get into new markets must be encouraged by the government to do so."
And he urged the Bank of England's monetary policy committee (MPC) to maintain a flexible stance on interest rates.
"We are not unhappy with the MPC's decision earlier this month to leave rates unchanged, but we would expect the MPC to react quickly if economic circumstances worsen," he said.
"The bank must show a flexible attitude and follow the market."
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