London, July 8 : The British Chambers of Commerce (BCC) has warned that Britain is only three months away from sliding into a full-blown recession.
In a devastating new quarterly report, the business chamber warned today that companies are reporting alarming shortages of hard cash as the credit crunch bites.
Describing the signs in the UK economy as "ominous", the chamber claimed that business confidence has collapsed in both the service and manufacturing sectors.
Basing its report on a survey of a record 5,000 firms, the BCC also said that confidence about profits is down 16 per cent in the service sector to levels last seen in 1990.
It also said that domestic sales and orders have plunged by up to 21 per cent in the service sector - and are also down in manufacturing.
The Sun quoted the chamber as further saying that employment expectations too have fallen sharply to early 1990s levels, while cash flows, or the amount of money firms have on hand, has fallen to "record lows" as the credit crunch and rising costs hit home.
BCC Director General David Frost said: "These results show a real risk of recession in the coming months. The temptation for the Government will be to raise business taxes in the next pre-Budget report because the exchequer is running out of money. This would be a catastrophe."
BCC economic adviser David Kern said: "The outlook is grim, and we believe that the correction period is likely to be longer and nastier than anticipated."