UK economic growth forecast cut to 0.1%
The British Chamber of Commerce (BCC) has reduced its estimate for growth in the UK’s economy. in its quarterly economic forecast.
The BBC has reduced its forecast, from growth of 0.6 per cent in 2012 to just 0.1 per cent.
The UK economy contracted by 0.3 per cent in the first quarter and the BCC expects a further contraction in the second quarter.
However, it expects growth to return from the third quarter, with 1.9 per cent growth expected in 2013 and 2.3 per cent in 2014.
John Longworth, director-general of the BCC, said: “Without a bold, enterprise-friendly government, the economy will continue to bump along the bottom for longer than we’d all like.”
Mr Longworth called from the creation of a dedicated business bank to provide the investment needed to boost the economy.
The BCC expects problems in the eurozone to continue for some time, putting further pressure on UK businesses.
A survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS), suggests that the UK manufacturing sector fell at its fastest rate since May 2009 last month.
The index of factory output fell to 45.9 from 50.2 in April, significantly lower than the forecast of 49.7.
A reading below 50 on the index indicates contraction
CIPS Chief Executive Officer David Noble said: “The harsh realities of the weak global economy and sluggish domestic demand are bearing down on U.K. manufacturing.
“The sector could well become a drag on the U.K. economy as it seeks a return to better health.”
Markit economist Rob Dobson said: “”Perhaps of greatest concern is that this month’s drop is not simply linked to the ongoing crisis of the euro zone, but to increasing weakness of the UK domestic market.”