A bleak picture of life for small businesses at the sharp end of the credit crunch is painted by the British Chambers of Commerce today, in a survey of sentiment that warns of 'exceptionally bad' conditions for enterprise.

The findings will add weight to the BCC's call yesterday for the Bank of England to cut interest rates by half a percentage point on Thursday, a demand echoed by the CBI employers' group. The third-quarter survey of 5,000 businesses of all sizes and sectors found that sales as well as orders had fallen more steeply than in the previous three months, in both the manufacturing and services sectors.

Manufacturing export orders, which were expected to benefit from the weaker pound, had plummeted. This was 'a disturbing and unusual situation,' the BCC said.

David Kern, an economic adviser to the BCC, said: 'Overall, the alarming Q3 results point to worsening dangers of major economic downturn and rising unemployment. The results support the view that a UK recession has started and the downturn is getting worse. The domestic economy is under immense pressure.'

The survey found that the balance of manufacturers reporting lower domestic sales had risen to the highest since the third quarter of 1999, while orders for future manufacturing business were at their lowest since the fourth quarter of 1998.

Financial Times, Daily Telegraph