More trading stress ahead

Published:  28 January, 2010

BIRMINGHAM: Trading conditions are likely to remain extremely tough in 2010 despite the return to growth warns the Birmingham Chamber of Commerce.

Paul Bassi, president of the Birmingham and Solihull Chamber of Commerce (BCI), said the car scrappage scheme and strong Christmas figures have boosted retail sales.

He said: "The latest GDP figures only show a technical exit from the longest recession since the second world war. Conditions remain tough. Cash flow remains critical and further measures, such as the scheduled increase in national insurance contributions in 2011, won't make trading conditions easier in the medium term. VAT has already returned to 17.5% and businesses should not be lulled into a sense of complacency."

ONS data shows the UK economy shrank by 4.8% in 2009 returning to growth last quarter by 0.1% ending a record six straight quarters of contraction.

Although the 18-month recession has now technically ended, the lacklustre performance alarmed financial experts, raised fears of a further slump and prompted a political row.

The weak economic figures undermined government assurances that the economy would bounce back strongly from the worst recession since records began in 1948, and raised questions over the plans drawn up by both main political parties ahead of the general election.

The fragile recovery also threatens to derail the improving housing market and the recent fall in unemployment, as companies become concerned about the country's economic prospects.

Alistair Darling, the chancellor, said the country could slip back into recession and a spokesman for Gordon Brown warned of "bumpy times ahead".

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