According to the British Chambers of Commerce, the risk of entering into a recession is increasing as consumers restrict spending and growth of manufacturing slows. The business group are concerned that the latest course of quantitative easing won’t be enough to prevent a double-dip recession.
Results of a survey conducted by BCC show that consumers are facing the worst crisis in more than 30 years, as wages fail to rise and retail prices and taxes are on the increase. Estimates from BCC state that growth of the economy, in the quarter to September, grew between 0.1 and 0.3 percent. However, a more optimistic estimate from the National Institute of Economic and Social Research placed the estimates for growth at 0.5 percent.
More bad news was forecast by the Institute for Fiscal Studies, as they expect the average UK income to fall by seven percent in real terms between 2010 and 2013, which would be the highest reduction in 35 years. If this happens, another 800,000 adults and 600,000 children will be pushed into poverty.
Although forecasters predicted that sales would fall for September, there was actually an increase of 0.3 percent compared with the same period in 2010. However, as that amount remained below the rate of inflation, this shows that consumers are purchasing less than they did last year. Samuel Tombs, from Capital Economics said:
“All in all, it seems increasingly likely that the manufacturing and consumer sectors of the economy contracted in the third quarter. As a result, the risks of a renewed recession in the wider economy still appear to be growing.”
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