UK economic growth has slowed down.
A further recession is “unlikely” but risks remain.
The rate of UK economic growth slowed in the last quarter of 2010, according to data revealed by the British Chambers of Commerce (BCC).
BCC statistics showed that the economy expanded by 0.4 – 0.5% in October to December, down by 0.2 % from the July to September figures. The slowdown was attributed to service sector weakness.
The Chamber highlighted that although a further hit to the British economy is “unlikely” the risks of another recession remain.
David Frost, BCC director general, said: “The manufacturing sector is growing very strongly and is a star performer, but the service sector is undoubtedly acting as a drag”.
He continued: “The manufacturing sector is being driven by exports, not least to the growth areas on the far side of the globe, but the service sector is suffering from a lack of confidence with consumer spending being reined in”.
The BCC polled 5,600 people and found that exports and sales of manufacturing goods were at their highest level in over 15 years. Despite these figures, manufacturers are concerned that public debt issues in Europe could lead to a reduction in demand for products made in the UK.
BCC chief economist David Kern said: “The disappointing performance of the service sector is disturbing, particularly as we are yet to see the full impact of the VAT increase, and deficit-cutting measures on these firms”.
He added: “Unless reversed, weaknesses in services could have adverse consequences, particularly for jobs. While we expect the private sector to prove sufficiently robust to withstand the impact of the tough deficit reduction programme, the UK recovery is fragile”.