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Britain's descent into full-blown recession was highlighted yesterday after the loss of more than 3,300 jobs across the economy was followed by three grim surveys chronicling savage retrenchment in housing, retailing, manufacturing and services.
Amid fears that 2009 could see the biggest fall in output in any year since the war, snapshots from the Royal Institution of Chartered Surveyors, British Retail Consortium and British Chambers of Commerce plumbed record lows last month.
The RICS said estate agents sold 10.1 homes on average in the final three months of 2008, the weakest performance in three decades, while the BRC said deep discounting could not spare shops and stores from the grimmest December since it began its survey 14 years ago.
David Frost, director general of the British Chambers of Commerce, called for a national economic recovery plan after the BCC's quarterly report showed record lows for manufacturing sales, orders, job prospects, investment, confidence and cash flow. "These are truly awful results, with the scale and speed of the economic decline happening at an unprecedented rate. We have to focus on holding the productive sectors of the economy together. If we are to climb out of this morass we will need a strong business base."
With the BCC warning of a "frightening deterioration" in the state of the economy across all 12 regions of Britain, Frost urged cross-party action. "A clearly defined national recovery plan will need to be rolled out as soon as possible, involving all politicians."
The BCC, which has been reporting on the economy since 1989, said there was no evidence that the fall in the value of sterling late last year was helping exporters. "It is clear that the economy is facing a very serious recession, and the downturn is deepening at an alarming pace. The collapse in all the fourth-quarter confidence balances to record lows is particularly ominous."
It described the deterioration in the service sector - the mainstay of the economy - as "extremely worrying" after revealing that the largest sector firms recorded their worst ever performance for domestic sales in the final three months of 2008.
Stephen Robertson, the BRC's director general, described retailers' December trading performance as "truly dreadful" after it emerged that the value of sales was 1.4% lower in December than a year earlier. Only the food sector showed annual growth last month.
"Non-food retailers had a torrid time in December despite a blizzard of promotions and deals, which would have hit margins," Robertson said, urging ministers to reduce cost pressures. "This is no time for the government to be piling new burdens on a major job-supporting sector. For example, its plans to push retailers' business rates bills up by £1.6bn over the next two years urgently needs revising."
The RICS said there was evidence that the sharp fall in interest rates since October had led to an increase in inquiries from potential buyers but the credit crunch meant that had yet to be translated into sales. Completed property sales were 57% lower in December than a year earlier even though new buyer inquiries rose for a second month and at the fastest pace for more than two years.
Ian Perry, RICS spokesman, said: "Buyer interest is now at levels not seen since 2006, but without mortgage finance the housing market is at a standstill and transaction levels at an all-time low. First-time buyers and owner-occupiers are now stuck in a market which does not fulfil their aspirations. The government must act now to ensure that order is restored to the current chaos.
"A first step would be to for the government to provide guarantees for the new issuance of residential mortgage-backed securities. Without this help there is a real danger that homebuyers will be frozen out of the market, transaction levels and prices will fall to new lows, repossessions will increase and negative equity will become commonplace."
Data released by the Bank of England yesterday showed that the full benefits of lower borrowing costs are still not being passed on to the public. A new 75% loan to value tracker mortgage fell by 0.83 of A percentage point last month even though the Bank cut rates by a full point at the start of December. Over the past year, Threadneedle Street has shaved 3.5 points off bank rate but a 75% tracker mortgage has come down by 1.25 points. Interest rates on credit cards, overdrafts and personal loans are all higher than a year ago.
- Recession
- Retail industry
- Housing market
- Unemployment and employment data
- Bank of England
- House prices
- Property
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