UK Economy Continues To Make Weak Progress

By: Dr. Mike Campbell

According to the British Chambers of Commerce (BCC), the UK economy is set to post weak growth when Q2 figures are released. The BCC survey involved more than 5500 businesses across the UK and concluded that the economy will have grown by 0.6 to 0.7% during the quarter. The manufacturing sector seems to be more buoyant than the service sector, but (unsurprisingly) there is still concern over the durability of the recovery. The recent UK coalition government’s budget was well received by BCC members who seem to believe that the UK deficit must be reduced if sustainable growth is to be achieved in the future. It seems that BCC members are prepared for short-term hardships in order to arrive at a more secure future for the UK.

BCC members report that trading activity in the UK’s retail and service sectors has been slow. These sectors account for three quarters of the UK’s GDP. There has been an upturn in employment within the UK manufacturing sector. The sector has enjoyed export growth due to the recent decline of Sterling, but, of course, the price for raw materials has been increasing which may inflate the price of finished goods in the coming months.

UK unemployment officially stands at 7.9% of the workforce which equates to 2.47 million people although the true number of individuals who would like to be in full-time employment may be significantly higher. For many years, UK governments of either major party have devised new and imaginative ways of counting the ranks of the unemployed. Indeed, the UK Office of National Statistics recognises that (at least) 8.19 million people are “economically inactive” – this group is determined to be made up of people out of work, but not seeking employment… er, right.