The HVAC sector is facing a tough 12 months after the Confederation of British Industry (CBI) warned Britain was now in recession and 2009 economic growth would be ‘feeble at best’.
In a statement bound to send shivers through the building services industry, the employers’ organisation dramatically slashed its economic growth forecast for next year from 1.3 percent to 0.3 percent - the lowest level since 1992
Investment, it said, was poised to shrink by 3.5 percent in the coming months and by a further 4.0 percent next year, with residential and commercial property markets taking the brunt of the downturn.
The CBI blames the deepening crisis on sharp rises in fuel and food costs, declining incomes and the stagnant housing market. It predicts household spending will tighten by 0.3 percent in 2009.
One of the most tangible effects of the recession will be rising unemployment which, says the CBI, is set break the two million mark next year – a level not seen since 1997,
Richard Lambert, CBI director general, said: 'Over the past year our forecasts for economic growth have been shaved lower and lower as the UK economy continues to struggle with the twin impact of higher energy and commodity prices and the credit crunch. Growth in 2009 will be feeble at best.”
Britain is not returning to a 1990s-style recession, Lambert has reassured, when job cuts and a slump in demand were far more prolonged.
“The squeeze on household incomes and company profit margins from higher costs will begin to ease as the price of oil moves downwards and, although the credit crunch will be with us for some time, conditions are set to improve later in 2009,” added Lambert.
At this point the Bank of England will have ‘leeway’ to cut interest rates, said Lambert, and as inflation falls Britain would be ‘well placed to move beyond this difficult stage’.