Recession in UK 'still not over'

Confidence among manufacturers is at its highest level since early 2008

A leading business group has cast doubt on whether the UK economy emerged from recession in the third quarter of 2009.

The British Chambers of Commerce (BCC) said business confidence was improving but the economy was still "frail".

Official GDP figures are due next week. If they show no growth, it will be the first time the UK has endured six successive quarters without growth.

Separately, UK retail sales rose 2.8% from September 2008, the British Retail Consortium (BRC) said.

But the BRC warned that "we mustn't get carried away" - as the figures are compared with a "weak performance" last September when turmoil in the financial markets hit consumer confidence.

'On the brink'

The BCC surveyed more than 5,500 companies and found that confidence strengthened across the board.

Confidence among manufacturers was at its highest level since the beginning of 2008.

But despite "good progress" being made in both the manufacturing and service sectors, domestic orders and sales were still down on the previous quarter, the BCC said.

"The Q3 results support our assessment that the UK economy is on the brink of leaving recession," David Kern, chief economist at the BCC said.

"However, the improvement is not sufficiently strong to allow us to conclude without doubt that GDP has already returned to positive growth."

He told the BBC that businesses had made "difficult decisions" at the start of the downturn - including job cuts and and stopping investment. "This kept cash in the business and now they are in a position to invest."

Last week, official figures showed that UK industrial output fell unexpectedly in August, confounding analysts' expectations of an increase and casting doubt on the strength of the economy.

This prompted the National Institute of Economic and Social Research to revise its estimate for GDP, estimating that the economy did not grow in the June-to-September quarter.