Business investment may fall further
August 31, 2009
Business spending figures through the second quarter of the year were down to their lowest level since records began forty-three years ago.
The IMF has said that the severity of the credit crunch in the U.K. is likely to mean that its potential growth rates will be more acutely affected than countries like Europe, Japan and the United States.
Growth rates will drop because of a combination of lack of investment and the lack of an available workforce, said Citygroup economist Michael Saunders. The U.K. has seen a 47% drop in applications from workers in Eastern Europe, the lowest it has been since the Union enlargements in 2004.
Chief economist at the British Chamber of Commerce, David Kern said: “The further sharp decline in business investment signals serious threats to Britain’s long-term recovery. Unless this trend can be reversed, the productive capacity of the economy will be damaged, and the country will lack the necessary capital stock to sustain a recovery.”
The results published at the weekend by 70 London-listed companies suggest that business spending might be about to fall further.
The drop in business investment during this recession has been greater and sharper than it ever was in the downturns of the last three decades.
Thanks to www.thepeninsulaqater.com for the above quotes, for more information on this article please visit their website.
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