BCC revises UK economic growth forecast
The British Chambers of Commerce (BCC) has today revised its growth prospects for the UK economy.
The lobby group is now forecasting growth of just 1.1% this year, down from its 1.3% forecast in June and much lower than the 1.9% it estimated at the start of the year.
Meanwhile, it is expecting growth of 2.1% in 2012 – slightly lower than an earlier forecast of 2.2%.
In comparison, the Confederation of British Industry (CBI) recently revised its growth prospects to 1.3% this year, down from its May forecast of 1.7%.
The Government’s independent Office of Budget Responsibility (OBR) has a more optimistic 1.7%.
However, the OBR’s estimate was made in March and a recent interview involving chairman, Robert Chote, said “there aren’t many people” who now believe in this forecast.
Meanwhile, commenting on its growth revision, BCC director general David Frost said the Government had to do more to help businesses grow, while continuing with its programme of trimming the budget deficit.
“If we don’t get these policies right, we risk any recovery being weak and short-lived”, said Mr Frost.
The BCC also believes the Bank of England should consider a fresh round of quantitative easing (QE) if weak economic growth continues – a scheme designed to boost the economy.
Last week, the Office for National Statistics (ONS) revealed the UK economy grew by 0.2% in the April to June period.
Growth for the second quarter slowed from the 0.5% growth posted in the first quarter.
The slowdown in growth has been hit by lower consumer spending as households continue to be squeezed by higher inflation, unemployment and limited wage growth.
Finally, the BCC expects unemployment to rise to 2.62 million by the end of 2012, while expecting inflation to hover around the 4.4% mark by the end of the year – albeit still more than double the 2% target.