LONDON (Reuters) - Britain’s economy has lost momentum over the past few months, with firms scaling back investment and hiring plans, business lobby BCC said on Tuesday, in another sign that a meaningful economic recovery remains elusive.
The quarterly survey by the British Chambers of Commerce also showed that domestic and export demand slowed as the government’s austerity drive and the euro zone debt crisis weighed.
“Economic growth is weak and businesses are less confident and less likely to invest than they were at the beginning of the year,” BCC Director General John Longworth said in a statement.
The BCC stuck to its long-held view that the economy has avoided recession, contradicting data from the Office for National Statistics, because the 7,593 firms surveyed continued to report growth rather than contraction in output.
“While the official assessment that the UK was in technical recession for three consecutive quarters is still too gloomy in our view, it is clear that the economy has been stagnant for too long,” BCC chief economist David Kern said.
The BCC now predicts growth of 0.5 percent in the third quarter.
Most economists reckon official data will show that Britain posted some economic growth in the third quarter, rebounding after an extra national holiday in the previous quarter and helped by sales of tickets for the London Olympics and Paralympics.
But a vigorous return to health is seen as unlikely despite the Bank of England’s efforts to boost the economy with a total of 375 billion pounds worth of asset purchases. The BCC’s survey provided little reason for optimism.
Manufacturers and service firms reported slower sales growth and falling orders in Britain, the BCC said. Export demand and orders growth also weakened.
“Fewer firms are looking to invest in training and plant and machinery, and confidence in future turnover and profit has fallen to levels last seen at the end of 2011,” the BCC said.
Manufacturers as well as services firms also cut back their hiring plans.
The labour market has been one of the few bright spots in Britain and employment has risen over the past 12 months despite the weak economy.