11th February 2008
Small businesses 'vulnerable' to possible downturn
British businesses face a difficult year in 2008, according to the British Chambers of Commerce (BCC).
But although there is a risk of a downturn, it says, a recession is unlikely if the Bank of England and the government 'take correct policy measures'.
The predictions are part of the BCC's quarterly economic forecast, which says that the UK's year-on-year GDP growth will fall from a strong 3.1% in 2007 to 1.7% in 2008.
The BCC also predicts that the Bank interest rate is likely to fall to 4.75% by mid-2008, but that a rate as low as 4.25% is 'realistic' if the economic slowdown worsens.
"Lower interest rates are necessary, but may not be enough on their own to counter the risks of a downturn," said BCC economic adviser David Kern. "Recent tax changes and weaker demand will have adverse effects on business, particularly if banks tighten credit."
"Small businesses are particularly vulnerable when the banking sector is under pressure," he added, "and the government may have to take special measures to support them if the credit crunch worsens."
But although there is a risk of a downturn, it says, a recession is unlikely if the Bank of England and the government 'take correct policy measures'.
The predictions are part of the BCC's quarterly economic forecast, which says that the UK's year-on-year GDP growth will fall from a strong 3.1% in 2007 to 1.7% in 2008.
The BCC also predicts that the Bank interest rate is likely to fall to 4.75% by mid-2008, but that a rate as low as 4.25% is 'realistic' if the economic slowdown worsens.
"Lower interest rates are necessary, but may not be enough on their own to counter the risks of a downturn," said BCC economic adviser David Kern. "Recent tax changes and weaker demand will have adverse effects on business, particularly if banks tighten credit."
"Small businesses are particularly vulnerable when the banking sector is under pressure," he added, "and the government may have to take special measures to support them if the credit crunch worsens."
- 5th January 2009 Businesses urged to make redundancies 'last resort'
- 5th January 2009 'Cut interest rate to 1%' says business group
- 2nd January 2009 Gloomier forecast from business group
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