UK definitely in recession, say British business chiefs

The UK is already in recession, with business confidence, profits and turnover at record lows and unemployment set to rise by up to 350,000 in the next year, according to a report today.

The British Chambers of Commerce surveyed 5,000 British firms and said it was clear the UK was now in a " worsening" recession.

Employment expectations among the firms were the worst since 1993 and the BCC warned that the jobless total was expected to increase by between 300,000 and 350,000 over the next 12 to 24 months, bringing the total over the two million mark.

The BCC urged the Bank of England and the Government to act - by cutting interest rates by 0.5 per cent this week and slashing business taxes respectively - to avoid a "major" recession.

David Kern, economic adviser to the BCC, said: "The results support the view that a UK recession has started and the downturn is getting worse. The domestic economy is under immense pressure.

"Without forceful and urgent correctiveaction, there is a serious danger that the recession will deepen and cause huge damage. Over the next four months, interest rates must be cut to four per cent as a minimum.

"While a moderate recession is very probably unavoidable, the worst consequences can be mitigated if correct policies are adopted."Job levels were "stagnant" but employment expectations had slumped, the report added.

Paul Kenny, general secretary of the GMB union, said: "This report confirms that things will get worse. We need a cut in interest rates to at least slow down the recession."

Speaking in London last night, the Mayor of New York, Michael Bloomberg, called for greater transparency to break the cycle of uncertainty. In Haberdashers' Hall in the City last night, Mr Bloomberg said: "[Lack of transparency] is a big reason not only for the panics that our countries have experienced but also for the freezing up of credit markets. We simply don't know the value of the assets that financial institutions are holding." Greater transparency would help restore the confidence the market needs.

CBI president Martin Broughton said today that the UK will head for a "malign scenario of a much-deeper than necessary recession" unless banks start lending to each other again.

By not lending, the banks were "compounding the crisis of confidence", Mr Broughton added.

But he said that the sky had "not fallen in on the UK economy", any recession need not be as bad as the one in the early Nineties and that things would start looking up in 2010.

Output in the UK manufacturing sector fell for the sixth consecutive month in August - by 0.4 per cent - to record its longest period of decline for 28 years,according to the Office for National Statistics.

'I have no idea if my money is safe'

DAISY DUMAS is one of the savers hit by the Icelandic banking crash.

The 27-year-old editorial assistant, from Queens Park, opened a savings account with Icesave last year and is now unable to withdraw her money.

She said: "I have £800 in a high interest account which I was saving to go away travelling. There's no information on what is going to happen. I keep checking the Financial Services Authority website but there is nothing on there yet. I did a lot of research before joining Icesave. It was offering an interest rate of 6.4 per cent, which was great.

"Up until yesterday the bank was assuring its customers that everything was ok and then this happens. There's nothing I can do apart from just sit and wait now."