Recovery faces 'significant challenges' say business leaders

The UK economic recovery still faces "significant challenges" despite a growth spurt of around 1% over the most recent quarter, business leaders have said.

The British Chambers of Commerce (BCC) wants the Government and Bank of England to ensure that momentum is maintained, particularly as external risks such as the US debt crisis threaten to derail the fragile recovery.

Its quarterly economic survey, which is made up of responses from more than 7,400 businesses, shows improvements in most key areas for both manufacturing and services compared with the second quarter.

On the basis of the results, the BCC estimates that GDP will be around 0.9% or 1% higher in the third quarter, leading to better forecasts for this year and next.

However BCC director general John Longworth said the signs of progress must not lull the country into a false sense of security.

He added that levels of investment were still a concern and that more support was needed for exporters through increased trade promotion and better access to finance.

Mr Longworth added: "The Government mustn't get distracted, and has to put growth first at all times.

"We will be looking ahead to the Autumn Statement in the hope that the Chancellor uses this opportunity to make a real difference and go all out in the name of growth.

"As we get closer to the general election, political parties must not be drawn into politicking for cheap votes at the expense of clear, long-term policies that will help build a truly great economy."

Among the highlights in today's report, the BCC said employment in the services sector is now at its highest level since 2007.