Economic recovery 'long way off'

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Fresh job losses are predicted and firms complain of a deterioration in the availability of working capital, with most expecting the position to get worse.

The CBI, which holds its national conference in London on Monday, unveiled a 10-point plan it said was needed to keep business working and safeguard jobs, including an urgent need to improve the flow of capital to businesses.

Director general Richard Lambert revealed that some firms were now having to decide whether to take delivery of goods waiting to be collected from UK ports because of the economic uncertainty.

"Cash flow pressures are causing real problems for companies which could lead to a greater level of insolvencies. The road to recovery is a long way off," said Mr Lambert.

The poll of over 200 firms painted a "disturbing" picture of how the financial turbulence had spread to the whole economy, said the CBI chief, adding: "The effects are acute for both working and investment capital and are causing major re-writes of business plans.

"We understand the difficulties the banks are facing and recognise that there is no easy silver bullet, but there are pro-active measures that government can take to make the next six months less difficult."

Five times as many businesses said they expected conditions to get worse in 2009 than to improve, and three out of four larger firms were planning to cut jobs.

Mr Lambert said the figures tallied with the CBI's forecasts suggesting that unemployment will "almost touch" three million by the Spring of 2010.

The next six months will be "critical" in how deep the recession will be, the CBI said, urging the Government to take a number of measures to help business, including a temporary reduction in employer National Insurance contributions, freezing business rates and bringing forward capital spending.