Industry leaders in Coventry and Warwickshire are calling for a series of business tax cuts in order to stimulate the economy and save jobs.
The Coventry and Warwickshire Chamber of Commerce has received figures from the British Chambers of Commerce (BCC) latest quarterly economic forecast which predicts that the UK could spend the whole of 2009 in recession.
The BCC report claims that UK unemployment could reach three million and that, if the situation is handled incorrectly by Government in terms of borrowing, the value of the pound could plummet.
Coventry and Warwickshire Chamber of Commerce chief executive Louise Bennett said the Government had to handle the crisis very carefully.
“If their action appears irresponsible, then it will have the wrong type of impact. However, if they are not bold enough they might be seen as fiddling while Rome burns – so it is a very difficult line to tread,” she said.
Ms Bennett said the BCC’s latest quarterly economic forecast should be studied long and hard by the Government and she urged ministers to take on board suggestions in time for next Monday’s Pre-Budget Report.
“Cutting taxes on businesses and lowering National Insurance rates should be done as a matter of urgency in order to limit the threat of this sharp rise in unemployment,” she said.
The Chamber said its own Weathering the Storm package was already proving helpful to firms in Coventry and Warwickshire.
It is also holding events across the region to offer practical advice on how to stave off the effects of recession.
Free drop-in sessions at the Chamber’s headquarters in Binley for firms that fall on hard times are also taking place.
The BCC said its third quarter survey showed results were “exceptionally bad” and followed on from worrying trends earlier in the year.
It said virtually all the key national balances had worsened, and many were in negative territory.
The domestic economy was shown to be under immense pressure for the second quarter in a row, with the recession just around the corner.
The BCC said it hoped that if the Government and the Bank of England’s Monetary Policy Committee could act together then stability and confidence may begin to shows signs of recovering.
Key results from the survey, which was supported by around 5,000 businesses of all sizes and sectors, were that domestic balances, sales as well as orders, had all moved deeper into negative territory and that all firms in manufacturing and services, regardless of size, were showing negative balances.
In addition, manufacturing export balances had plummeted and there was a collapse in confidence across sectors.
Recruitment dipped and many firms said they would find it hard not to cut jobs.
BCC director-general David Frost said it was critical to retain confidence as many firms remained viable despite the climate.
“The Government needs to say that business taxes will be cut,” he said, adding that interest rates needed to be kept under constant review.
BCC economic advisor David Kern said that results indicated that the UK recession had started and things were set to get worse.
“The domestic economy is under immense pressure,” he said, adding that interest rates still had to come down despite the 1.5 per cent cut earlier this month.
The BCC has maintained that the Government must put in place a credible framework for dealing promptly with any financial institution that may experience problems.
While intervention was not always desirable, it said a flexible approach needed to be adopted must would again encourage confidence in the system.
“The smooth flow of finance to businesses must be sustained at all costs. Any thought of early tax increases must be quashed.
“While a moderate recession is very probably unavoidable, the worst consequences can be mitigated if correct policies are adopted,” added Mr Kern.