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Recession 'looming' For Uk Firms

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http://news.bbc.co.uk/1/hi/business/7494508.stm

The UK is facing a serious risk of recession within months, the findings of a survey of almost 5,000 small and medium-sized businesses suggest.

The British Chambers of Commerce's (BCC) quarterly report found the credit crunch and rising costs had dented the most important sectors of the economy.

Firms in the manufacturing and services sector said domestic sales and orders had slowed over the last three months.

If these trends continued, a recession was only months away, the BCC warned.

The BCC, which represents many small and medium-sized businesses, also said firms were experiencing serious cash-flow problems.

Its economic adviser, David Kern, said the survey showed a "menacing deterioration" in UK prospects.

"We are now facing serious risks of recession," he said.

Grim outlook

"The outlook is grim and we believe that the correction period is likely to be longer and nastier than expected."

Services firms, which include restaurants, gyms and tour operators, have been particularly hard hit, the BCC reported.

Sales and orders, job expectations and confidence in this sector had hit their lowest levels since the recession of the early 1990s.

The BCC's director general David Frost said the report was deeply worrying.

"I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country," he said.

"To put more pressure on business would not only restrict business growth and hit the consumer hard, it would crush further what our economy is based on - confidence."

There has been disappointing news on house building and mortgages

The report is likely to add to the wave of pessimism sweeping across the business world, from retailers to house builders.

Last week, the housing market suffered another blow when the Bank of England said mortgage approvals had plunged by 28% in May and were 64% lower than a year earlier.

House builders are cutting jobs and offices as the property slump continues.

Persimmon, one of the UK's biggest house-building companies, is expected to announce 1,000 job losses later.

The firm reported a 24% drop in revenues from the beginning of 2008 to April, and has seen its share price plunge to a fifth of its value a year ago.

Rachel Waring, a broker at Panmure Gordon, said Persimmon was a "bellwether" of the sector, adding: "We believe conditions in the housing market have deteriorated further since the company last reported."

Job losses

Builders Taylor Wimpey and Barratt Developments have also announced 2,000 redundancies in the past week.

The mortgage drought has meant many people have been unable to secure the finance they need for a new home, while falling property prices have also put people off buying.

There was also grim news from manufacturers last week, a sector that had provided the only bright spot on the horizon until recently.

A survey showed output had fallen at its sharpest rate in nearly a decade, while inflation pushed up factory gate prices.

On the High Street, a profits warning from Marks & Spencer has not helped.

Some economists believe the chances of a recession in the UK are now 50:50.

They had hoped the slowdown in the economy would eventually reduce inflation, without turning into full-blown recession.

There are a number of definitions of a recession, but the most commonly used one is when there are two quarters in a row of economic contraction, or negative growth.

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As a small tour operator of sorts, I concur fully with this. Our sales are way down. 40% less airlift this year than last, and we will lose more airlines by 2009. Anecdotally, last week I was visiting one of our larger island 4* hotels at 200+ rooms - occupancy was just 40 people, massively outnumbered by the staff by several to one!

The Brits have largely gone, the yanks and even the Germans are way down, but what has struck me most is the age of those tourists still coming - no more mewing 20 and 30 somethings, or chavs on blow-the-dole-money cheap last minute package deals, most remaining visitors seem to be much older SAGA age groups now, presumably retired or wealthy or both.

So the beeb is right. Tour operators are doomed.

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Guest KingCharles1st

Well I run a small business making luxury items for rich people, and the cash flow is dire, to say the least.

Anecdotal, I think even the big companies are looking down the barrel of a gun now. Last night I was in PC World in Stevenage at 7pm, and the staff outweighed the customers by around 3 to 1.

It was like a morgue, has been like it "for weeks" apparently. I held up the headphone kit I was buying for 19.95, and said "This isn't going to pay your lots wages is it!" to which they all agreed, and I think many are shitting themselves that they are about to become unemployed. Apparently there have already been many head office redundancies, and tbh, it looked a dire situation from where I was standing. Basically six months ago you were lucky to get the attention of an assistant for more than 30 seconds, I had three of them chasing me around for a chat last night...

Edited by KingCharles1st

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I held up the headphone kit I was buying for 19.95, and said "This isn't going to pay your lots wages is it!" to which they all agreed, and I think many are shitting themselves that they are about to become unemployed.

Wages explosion? Raise the rates!

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Mr Frost of the BCC : What we need is consumers to start spending again.

What this shows is that the British Chamber of Commerce has appointed idiots at the helm. The way to get out of a debt fuelled recession is by getting into more debt by spending money you do not have? Screw em, I workm in heavy engineering and our order book is full. Next years order book is filling, we have brought a new product to market that is also filling it's production slots. What we are relying on is consumers going out and buying more iPods. ;) In addition engineers in the UK are now being poached left right and centre within the UK and abroad.

PS everybody keep using electricity, because I keep getting pay rises! :lol:

Edited by symo

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Mr Frost of the BCC : What we need is consumers to start spending again.

What this shows is that the British Chamber of Commerce has appointed idiots at the helm. The way to get out of a debt fuelled recession is by getting into more debt by spending money you do not have? Screw em, I workm in heavy engineering and our order book is full. Next years order book is filling, we have brought a new product to market that is also filling it's production slots. What we are relying on is consumers going out and buying more iPods. ;) In addition engineers in the UK are now being poached left right and centre within the UK and abroad.

PS everybody keep using electricity, because I keep getting pay rises! :lol:

actually, he's quite right.

Trouble is, people don't have the money to spend, and no-ones prepared to lend them any more to spend it.

ergo - -pop-

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actually, he's quite right.

Trouble is, people don't have the money to spend, and no-ones prepared to lend them any more to spend it.

ergo - -pop-

Yes, he is exactly right...BUT in the past 10 years, the economy has not been builton PROFITs, turning to wages then being spent, it has been built on lending turning to enhanced wages then to profit and back to further lending.

The economy SHOULD have contracted, become lean and mean and pretty nasty for most, then, we would have been able to compete and win PROFITS.

low interest rates SHOULD have helped, ie, people should have had some excess in their paypackets as housing costs reduced, but OOOO NOOOO, they just used the excess to borrow and outbid the next man, and he did the same and so on until the outbidding war became the reason to outbid. It coud only end in one way,,,,, IT HAS.

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Well I run a small business making luxury items for rich people, and the cash flow is dire, to say the least.

Anecdotal, I think even the big companies are looking down the barrel of a gun now. Last night I was in PC World in Stevenage at 7pm, and the staff outweighed the customers by around 3 to 1.

It was like a morgue, has been like it "for weeks" apparently. I held up the headphone kit I was buying for 19.95, and said "This isn't going to pay your lots wages is it!" to which they all agreed, and I think many are shitting themselves that they are about to become unemployed. Apparently there have already been many head office redundancies, and tbh, it looked a dire situation from where I was standing. Basically six months ago you were lucky to get the attention of an assistant for more than 30 seconds, I had three of them chasing me around for a chat last night...

Did you think you were sitting pretty because you made luxury items for rich people?

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Yes, he is exactly right...BUT in the past 10 years, the economy has not been builton PROFITs, turning to wages then being spent, it has been built on lending turning to enhanced wages then to profit and back to further lending.

The economy SHOULD have contracted, become lean and mean and pretty nasty for most, then, we would have been able to compete and win PROFITS.

low interest rates SHOULD have helped, ie, people should have had some excess in their paypackets as housing costs reduced, but OOOO NOOOO, they just used the excess to borrow and outbid the next man, and he did the same and so on until the outbidding war became the reason to outbid. It coud only end in one way,,,,, IT HAS.

You're a white van man aren't you? What is it you do?

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You're a white van man aren't you? What is it you do?

Actually I run my own business (2). :lol:

ALL economies utlimately come down to people spending.

If nobody spent, there would BE no economy.

Spending takes the form of what you buy for survival, what you buy for luxury, what you spend on housing, and finally ( or firstly) what you pay in tax to the Government for them to spend on your behalf.

Without YOU, there is no economy.

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Actually I run my own business (2). :lol:

ALL economies utlimately come down to people spending.

If nobody spent, there would BE no economy.

Spending takes the form of what you buy for survival, what you buy for luxury, what you spend on housing, and finally ( or firstly) what you pay in tax to the Government for them to spend on your behalf.

Without YOU, there is no economy.

What is it that your business does? Have you noticed a slow down?

Only reason I ask is because nearly everyone I talked with at the weekend mentioned how slow things were, companies cutting back on capital spending, worries about their jobs etc.

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What is it that your business does? Have you noticed a slow down?

Only reason I ask is because nearly everyone I talked with at the weekend mentioned how slow things were, companies cutting back on capital spending, worries about their jobs etc.

One of my businesses is into structural steel fabs, We have noticed a slow down, but had cut back on costs somewhat to compensate some time ago. This business is augmented with sales of stel products like shelves, but this area has really dropped back.

The other, which I do personally, is computer and network servicing.

Client work has Increased for me overall (bit lucky two of my clients are themselves a bit lucky), but this is not the case with fellows I know in the same game.

My problem in this business is that I have lost two clients this year to huge cutbacks and redundancies, ie one failed completely and the other down from 20 staff to just the boss now, so the pool of clients is falling back rather than being added to as per the last few years.

To combat this I have cut right back on debt so the overhead is as low as I can make it.

No new cars/phones etc etc this year. So we ourselves are cutting back. this I beleive is being repeated throughout the UK. the recession is inevitable, I am pretty sure.

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Even though the report came from the BBC, it is actually a fair assessment of what I see is going on out there in the world of business.

We've always put money aside for a rainy day and currently have 9 months' trading cash available (i.e. we'd have enough money to carry on paying suppliers and wages for another 9 months even if we sold nothing at all). We had our cashflow problems in Q4 07 and part of Q1 08 but we always had our cushion - I am frightened for the businesses that didn't or couldn't hoard money, just in case.

It's only going to get worse. Recession, definitely. I remain to be convinced that there'll be a depression (meaning 10% contraction) but given the daily bombs being triggered off in the economy, I can't rule it out.

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One of my businesses is into structural steel fabs, We have noticed a slow down, but had cut back on costs somewhat to compensate some time ago. This business is augmented with sales of stel products like shelves, but this area has really dropped back.

The other, which I do personally, is computer and network servicing.

Client work has Increased for me overall (bit lucky two of my clients are themselves a bit lucky), but this is not the case with fellows I know in the same game.

My problem in this business is that I have lost two clients this year to huge cutbacks and redundancies, ie one failed completely and the other down from 20 staff to just the boss now, so the pool of clients is falling back rather than being added to as per the last few years.

To combat this I have cut right back on debt so the overhead is as low as I can make it.

No new cars/phones etc etc this year. So we ourselves are cutting back. this I beleive is being repeated throughout the UK. the recession is inevitable, I am pretty sure.

And so begins the vicious downward spiral. This time it appears to be spinning at 2000rpm.

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I`ve lived through a couple of recessions, and although working (TV repairs), I never noticed any lack of work, I suppose that people are more likely to have things fixed in a recession. I now fit/repair TV aerials, install TV/AV systems, install/repair telephone sockets and do a little bit of PC repair/upgrade work. I`ve never had to "find" the work before, it`s come to me via recommendations and returning customers. I`ve known the odd quiet times before, maybe a couple of days, or even a week or two of reduced workload. The past couple of months have been extremely quiet, the phone has virtually stopped ringing. I`m not even getting customers asking for quotes. As far as I`m concerned, there is no `looming` recession, this IS a recession.

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Listening to Virgin Radio this morning, stuck in 1.5 hours of traffic and apart from some decent tunes, all they spoke about was impending recession. The OC has even started a recession watch by judging how bad it is getting by calling Gregs the bakers to give us the daily price of a Sausage Roll.

He is asking for listeners to call in and tell them what signs they have noticed, Cafes getting desperate for your buisness so they are knocking 20p off breakfast etc.

All done in a jovial way but the cat is well out the bag now :o

Bosh

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Listening to Virgin Radio this morning, stuck in 1.5 hours of traffic and apart from some decent tunes, all they spoke about was impending recession. The OC has even started a recession watch by judging how bad it is getting by calling Gregs the bakers to give us the daily price of a Sausage Roll.

He is asking for listeners to call in and tell them what signs they have noticed, Cafes getting desperate for your buisness so they are knocking 20p off breakfast etc.

All done in a jovial way but the cat is well out the bag now :o

Bosh

LOL - we had a good chuckle at this today, economists used to study the global price of a MacD Big Mac in different countries, but the good old British "Sausage Roll Index" sounds more homely :rolleyes: I miss (and love) the sanguine dry British humour which accompanies any national tragedy, the stiff upper lip and keep smiling thing will mean few riots, Brits are just too resigned to shite, and resolute in a challenge, to riot. Or maybe I have been listening to my Churchill speeches CD for too long

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On World at One, they interviewed Henk Potts, who painted a very bearish picture, as did the boss of a small business that had gone from healthy orders to nothing in a few weeks. But the business minister, who had her head in the sand, was saying manufacturing is doing well and the economy would still grow, albeit at a slower rate.

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Just in time for BOE moneytary policy meeting this week , BBC please dont put interest rates up :lol:

Next week, they will follow up on their pre-MPC bear-fest with press release accusing the media of "talking the UK into recession"

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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