'Action needed' even as trade gap narrows

The UK's trade gap on goods and services narrowed last month, but business groups are still calling on the Government to take steps to avoid recession.

The trade deficit is estimated to have narrowed from £5 billion to £4.6 billion in July, though over the three month period to the end of July it stood at £14 billion - up from £13.1 billion for the previous three months, according to the latest figures released by the Office for National Statistics (ONS).

And now the British Chambers of Commerce has sounded a warning to the government that the country is in a "technical recession", with GDP as a whole likely to record a decline in the final quarter of the year.

David Kern, economic advisor to the British Chambers of Commerce, reiterated his call for the Bank of England to cut interest rates to avoid recession.

"It is disappointing that the benefits of a weaker pound in terms of improved export competitiveness have not been sufficient to offset the negative effects for manufacturing of a weakening home market," he added.

"A major economic downturn can still be avoided, but early corrective action is needed."