Economy set to be even weaker in 2009, warns BCC

| May 11, 2008 | 0 Comments

The British Chambers of Commerce (BCC) has warned that the UK economy set to be even weaker in 2009.

The BCC said the current economic slowdown will be more prolonged than previously anticipated.

It warned that businesses should prepare themselves for a long slog before the credit crunch is over.

The organisation added that the Bank of England must take action to prevent a major downturn.

The Bank of England’s Monetary Policy Committee left interest rates unchanged last Thursday at 5% after lowering rates from 5.25% in April.

Many critics say the Bank should be more aggressive in cutting borrowing to assist consumer confidence.

David Kern, the BCC’s economic adviser, said the longer the Monetary Policy Committee waits now, the bigger the danger that the situation would deteriorate and the policy choices would become more difficult and more unpleasant later in the year.

Waiting unduly before easing further would pose unacceptable threats to growth, added Mr Kern.

In its latest quarterly economic update, the BCC downgraded its forecasts for annual growth next year from 2% to 1.6% due to the sharp deceleration in consumer spending expected over the next 18 months, as a result of increasing household bills and falling property prices.

The BCC emphasised that a recession remained unlikely but said the next 18 months will be difficult and risky.

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