BCC revises its forecast for UK economic growth
by Kay Murchie
The British Chambers of Commerce (BCC) has revised its forecast for UK economic growth, in light of austerity measures, the euro zone debt crisis, the VAT hike and the weak housing market.
Many experts and business organisations have said the tough austerity measures, introduced by the Government to trim the deficit, will undoubtedly hit growth.
As a result, the BCC is saying the UK will now experience growth of 1.9% in 2011, down from the 2.2% it predicted in September.
However, on a positive note, the employers’ organisation said growth in 2012 will be better than expected and it has upwardly revised its forecast for the year from 1.8% to 2.1%.
In addition, the BCC was optimistic about the economy, suggesting it was well situated to avoid a double-dip recession.
In comparison, last week the Office of Budget Responsibility (OBR) revised its estimate for growth for the next two years, expecting growth of 2.1% in 2011 and 2.6% in 2012, down from 2.3% and 2.8% respectively.
In the meantime, the BCC, which represents 100,000 businesses across Britain, is forecasting the unemployment rate will rise to 8% - an additional 150,000 to the 2.45 million already jobless.
The UK unemployment rate currently stands at 7.7%
The organisation also believes that inflation will remain above 3% for the whole of next year.
The latest figures from the Office for National Statistics (ONS) show Consumer Price Inflation (CPI) rose to an annual rate of 3.2% in October, up from 3.1% in September.
The latest figure represents the eleventh consecutive month that inflation has been above the target of 2%.
The Governor of the Bank of England, Mervyn King, recently said inflation could rise above 3.5%, due to the decision to hike VAT to 20% next year.
Finally, the BCC expects the Bank of England to maintain interest rates at the historic low of 0.5% until at least the second half of 2011.
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Tags: austerity measures, BCC, British Chambers of Commerce, debt crisis, Economy News, euro zone, forecast, growth, housing market, inflation, interest rates, revise, unemployment, VAT rise
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