‘UK economy risks possible recession’

A new survey says Britain’s economy will quite possibly face recession in first half of 2012 following stagnation in the final quarter of 2011 due to the euro zone debt crisis.

The survey from the British Chambers of Commerce (BCC) said that the economy will experience one quarter of negative growth over the next six months, British media reported.

The BCC – which polled nearly 8,000 members – stopped short of forecasting an outright recession, but gave a gloomy forecast, which represents firms employing about one in six British workers.

“A new recession is not a foregone conclusion. However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing euro zone crisis,” said BCC Director General John Longworth.

The BCC survey covers both manufacturers and service sector companies. Manufacturers reported their weakest domestic sales growth since Q3 2009, while orders fell at the fastest pace since Q2 2009, according to reports.

Export sales and orders were still growing, but at the slowest pace since Q3 2009, and firms were planning to cut jobs and rein back investment in the light of the weakest prospects for sales and profit growth in two and a half years.

Meanwhile, the government’s independent forecasting unit, the Office for Budget Responsibility, predicts growth of just 0.7 percent this year.