(RTTNews) - Domestic economy is under immense pressure for the second straight quarter, with the survey pointing that the UK is in a worsening recession, a survey conducted by the British Chambers of Commerce or BCC showed Tuesday.

In its Quarterly Economic Survey, the BCC said businesses and consumers need a half-point cut in the key interest rate at the next Monetary Policy Committee meeting of Bank of England.

David Kern, economic advisor to the BCC said, “The MPC must cut interest rates without delay, with a half per cent cut on Thursday becoming a necessity. Over the next four months, interest rates must be cut to four per cent as a minimum.”

Deepening global banking crisis emphasize the view that immediate threats to growth are more critical than dangers of higher inflation. The smooth flow of funds to businesses should be ensured and any thought of early tax increases must be quashed.

“The Government must put in place a credible framework for dealing promptly with any financial institution that may experience problems. We need a comprehensive scheme that replaces the current ad-hoc and piecemeal arrangements.” Kern added.

According to the quarterly survey, turnover confidence in the manufacturing sector slid 28 points, while profitability confidence plunged 16 points. At the same time, the service sector’s turnover confidence and profitability confidence fell 7 points and 13 points, respectively. All the third quarter confidence balances reached its record lows since the first quarter of 1989.

The BCC received over 5,000 responses from businesses of all sizes and sectors, belonging to the Chambers of Commerce in every region of the country.

The manufacturing sector’s balance for home sales declined 10 points in the third quarter to the lowest since 1999, while that for services fell by 5 points to the smallest reading since 1991. In contrast to a decline in the manufacturing sector’s export performance, the export balances for the service sector improved slightly in the third quarter.

Recruitment dropped across sectors and employment expectations weakened in manufacturing as well as the service sector in the third quarter. Investment balances in plant and machinery moved into negative territory for both sectors.

Further, cashflow balances remained negative in this quarter. The balance of manufacturing firms reporting pressure to raise prices dropped 3 points to plus 42%, while the balance of service firms expecting to increase their prices slid 3 points to plus 38%.

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