Government must maintain service sector gains

07-04-2009

Government must maintain service sector gains
Fragile gains in the service sector will fizzle out without increased government support, an economist has claimed, after figures released today show an improvement in services.

Despite record lows in manufacturing in the UK and a further predicted slump in GDP, the British Chambers of Commerce (BCC) said data for the first quarter of 2009 indicated that the service sector’s pace of decline is slowing.

The report showed that although the UK recession is still very serious, with GDP expected to fall more than three per cent in 2009 overall based on these results, the rate of decline in services has improved in all key areas this quarter.

The report warned, however, that despite the improvement in services, the sector still remained delicate. Without further measures to support wealth creating businesses, said the study, these hopeful signs will not turn into a sustained recovery.

Data from over 6,500 firms, employing almost 900,000 people, highlighted a severe deterioration in manufacturing exports, which are at a ten-year low.

The BCC called upon the government to act forcefully to ease the recession and help rebalance the economy towards exports and investment.

David Frost, director general of the BCC, said: "The Budget is an opportunity for the government to show business that it is doing everything possible to support them.

"It will be business that drives the UK out of recession and for this reason it is vital that they have the freedom to create jobs and wealth.”

David Kern, chief economist at the BCC, added that measures taken in recent months have failed to alleviate the downturn.

“This survey shows improvement in services, but these are fragile gains and will fizzle out without supportive policies,” he said. "In the face of recession, the policy stance must remain expansionary and quantitative easing should be aggressively pursued.”

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