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Monday, 8 March 2010

'High' risk of recession relapse

LONDON - BRITAIN which emerged from recession in the final quarter of 2009, faces a 'high' risk of relapse and below-average growth in the next two years, the British Chamber of Commerce warned on Sunday.

'The UK economic outlook will remain highly uncertain for a considerable time,' the BCC said in the group's latest economic forecast. The recovery will be fragile, and the risks of a relapse are high.'

The BCC predicted that the economy will grow 1.0 per cent this year, followed by expansion of 2.1 per cent in 2011. It shrank by 5.0 per cent in 2009. The 2010 forecast was unchanged from previous guidance but the 2011 figure was lower than its prior prediction of 2.3-per cent expansion.

'The obstacles to a sustained medium-term recovery now appear greater,' the business group said. The BCC added that the recovery would be 'modest and below the historical average in the next two years'.

Britain escaped from recession in the fourth quarter of last year with growth of 0.3 per cent. The expansion during October-December 2009 followed a deep recession that lasted six quarters - the country's longest on record. 'The recession may have technically ended, but there is no room for complacency,' BCC director general David Frost said in the report. 'For the recovery to be sustained, it is crucial that all the political parties recognise the vital role of wealth-creating businesses in driving economic growth and job creation.

'The government must use the forthcoming budget as a platform for laying the foundations for a business-led recovery,' Frost added, in reference to the budget which is widely expected later this month. 'If it fails to do so, the recovery will take longer to gain momentum and may even slip into reverse.' -- AFP

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