The British Chamber of Commerce (BCC) has revealed the results of its economic survey for the first quarter of 2009.

Gathering data from over 6,500 firms, employing over 900,000 workers in total, the survey clearly demonstrates that the UK recession is still very grave, and is not likely to end in the foreseeable future.

Manufacturing has been hit particularly hard by the recession, with record lows in virtually all indicators. Although the fall in the value of Sterling should have made British products more attractive to foreign buyers, the worldwide scale of the recession has meant that demand has been low. Manufacturing exports are now at their lowest levels for 10 years.

However, the picture painted by the survey is slightly brighter in the service industries, where the pace of decline appears to be slowing.

Although services are still in poor shape, they have improved in all key areas this quarter. Despite these gains, the service sector still remains in a distinctly fragile situation. There remains a risk that, without targeted measures to support wealth-creating businesses, a sustained recovery may yet be a long way away.

Commenting on the survey, David Frost, Director General of the BCC, said, “Although it is encouraging to see improvement in the service sector, there is more pain to come in this downturn. Manufacturing is still being hammered and exporters see little light at the end of the tunnel. Limiting the damage to our manufacturing base must be a national priority.”

Based on the results of this survey, the BCC expects the gross domestic product to fall by more than one percent in the first quarter of 2009, and to show a more than 3% decline over 2009 as a whole.

The increasing rates of redundancy means that unemployment looks set to rise further in coming months, with the BCC predicting a peak of 3.2 million by the third quarter of 2010.

David Kern, the BCC’s Chief Economist, added, “Despite the UK’s difficult financial position, targeted measures are needed in the Budget. This has to be combined with a credible plan for drastically cutting back the deficit in future years. Painful spending cuts will be needed in the medium-term.”

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