Inflation and high interest rates challenge Bedfordshire and Luton’s business says Chamber survey.
08/02/2008
Inflationary pressures and high interest rates are challenging businesses in Bedfordshire and Luton, according to the results of a Chamber economic survey. The Chamber, which represents businesses in Bedfordshire and Luton, takes part every quarter in the British Chambers of Commerce Quarterly Economic Survey, which takes a snapshot of conditions for business across the UK. Chamber members who responded to the survey last quarter cited inflation, interest rates and corporation tax as major issues for their businesses, while many are putting recruitment on hold.
Results across the country for the last quarter of 2007 indicate tough times ahead for the British economy. The survey – which for over a decade has influenced the Treasury and major financial institutions - suggests there are difficult decisions ahead for the Government and Monetary Policy Committee if they are to steer a safe course for the UK economy in 2008.
UK-wide results were largely negative with most critical balances for the manufacturing and services sectors falling. Of particular concern for the services sector were export balances, which were disturbingly weak while profitability confidence had plummeted 17 points. The manufacturing sector also saw export performances worsen markedly in the last quarter for 2007 with plans to increase investment in plant and machinery falling by 12 points.
However, David Kern, economic adviser to the British Chambers of Commerce, believes talk of recession is unjustified and must be strongly resisted:
'Overall, the survey results are negative. The critical balances for both manufacturing and services have fallen, with exports being of particular concern. The pressure that many firms are feeling on pricing show inflationary pressures that may be hard to keep a lid on.'
'If the right policies are adopted the damage associated with economic slowdown can be limited. Inflationary concerns cannot be shrugged off but a small interest rate cut in 2008 will alleviate the credit squeeze, prevent a major confidence loss and reduce the need for dangerous emergency measures later in the year.'
