By IRNA,
London : The UK is in serious danger of heading into recession as the credit crunch tightens its hold on the economy, according to a survey of businesses across the country published Tuesday.
The survey found an increase in the number of firms reporting fewer orders, more job cuts and less investment, indicating that the British economy is suffering from the effects of the global credit crunch and steep rises in fuel, food and other raw materials.
Firms in the service sector have seen “alarming” declines in the past three months, the British Chambers of Commerce (BCC) reported in its latest quarterly economic survey of 5,000 companies.
The findings come as fears of fresh losses in the financial sector swept stock markets worldwide Tuesday, sending shares falling in London and across Asia.
The FTSE 100 index of major companies plunged more than 2.6 per cent down to 5362.5 points in early trading, its lowest level since November 2005. In the past year, the index has now fallen more than 20 per cent from its peak of 6732.4 last June.
Government figures on Monday also showed that manufacturing production in May had dropped unexpectedly by 0.5 per cent from the previous month, and was down by 0.8 per cent on this time last year.
BCC chief, David Frost, said the latest survey showed there was “a real risk of recession” in the coming months. “This is deeply worrying, not just for business, but for the consumer too, with both manufacturing and services reporting negative results,” he said.
In May, Bank of England governor Mervyn King also suggested that the UK was heading for recession, commonly classed and two consecutive quarters of negative growth, saying that “the nice decade is behind us” and the UK is “travelling along a bumpy road.”