The British Chambers of Commerce (BCC) has downgraded its #UK economic growth forecasts for the third time this year.
In its latest Quarterly Economic Forecast, the BCC amended its prediction for 2011 economic growth to 1.1 per cent, down from 1.3 per cent in June, and 1.9 per cent at the start of the year.
The forecast for the drop in consumer spending in 2011 has also been downgraded, doubling from 0.5 per cent to 1 per cent, while UK unemployment is expected to peak in Q4 2012 at 2.62 million.
However, despite the downgrades, director general at the BCC, David Frost insists that, provided the right conditions are created for UK businesses to grow, there is no need for doom and gloom: “We expect prospects to improve over the medium-term, and believe that the UK has the potential to recover and thrive,” he said.
Speaking of the Government’s deficit initiatives, Frost added: “The Government is right to reduce the deficit, but these measures must be matched by policies to stimulate growth.”
Supporting UK businesses is essential to stimulating growth according to Frost: “We have to get the economy onto a more sustainable long-term footing, and it is business that will help us achieve this.”
He suggests that the Government needs to examine the infrastructure that supports businesses, from transport links to the reduction of red tape.
“If we don’t get these policies right, we risk any recovery being weak and short-lived.”
The forecasts also predict that the Bank of England’s Monetary Policy Committee will keep the base interest rate at its record low of 0.5 per cent well into 2012.
The downgrades follow the latest Office for National Statistics (ONS) figures, which showed that GDP growth dropped to 0.2 per cent in Q2, down from 0.5 per cent in Q1.