BCC revises GDP forecast

| September 6, 2009
”BCC

In its quarterly update, the British Chambers of Commerce (BCC) said the UK economy will contract by 4.3% in 2009 and will expand by 1.1% in 2010 (higher than the 0.6% increase forecast in its last update).

In June, the BCC forecast the economy would contract by 3.8% in 2009. However, its revised forecasts are broadly in line with the Organisation for Economic Co-operation and Development, who said last week that the UK economy will contract by 4.7% this year.

Meanwhile, the leading business group is predicting that the UK’s unemployment rate will rise to 9.6% with around 3 million out of work by mid-2010. This has been revised downwards from the 3.2 million forecast previously. The UK’s unemployment rate currently stands at 7.8%.

David Kern, chief economist at the BCC, comments: “The upturn in the economy has probably already started and we could see a relatively strong bounce-back in the next few quarters. But sustaining the recovery will be very challenging and the risks of a relapse are high.”

“Given the perilous state of our public finances, we cannot afford to ring-fence other spending categories, no matter how desirable it may be,” Mr Kern added.

“It is vital that new business taxes, higher National Insurance contributions, and any measures that may damage enterprise and job creation are avoided,” he concluded.

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