Fears that the UK economy could re-enter recession if significant steps aren’t taken to boost growth were heightened today after the British Chambers of Commerce negatively revised its growth outlook for the nation.
In September the BCC’s growth forecast for 2013 stood at 1.2 per cent. That figure has now been cut to 1 per cent. Meanwhile their predicted 2.2 per cent growth for 2014 has been dropped by an even more significant margin, to 1.8 per cent.
The London-based Chambers of Commerce argued that its decision was based on the continuing uncertainty surrounding global economic recovery and the probability of the government initiating additional austerity measures.
John Longworth, Director General of the BCC, commented: ‘Growth is still too weak. We have always been behind the chancellor’s aim of reducing the deficit, but this has to be supported with the right conditions that allow businesses to thrive, or we will fail to see the growth the economy so desperately needs’
The business lobby went on to state: ‘Since stretching the original timetable for stabilising debt is unavoidable – because of the recent overshoot in borrowing due to our weak growth – the markets are likely to accept steps aimed at overcoming stagnation. The precise scale of any stimulus that can be safely provided is a matter of judgement.
The BCC also warned that the only circumstances in which further quantitative easing should be considered are if ‘new threats emerge to the stability of the UK banking system.’
Chancellor of the Exchequer George Osborne is due to present his mid-year economic statement to Parliament tomorrow and the BCC is pushing for the pressured politician to bring about company-investment stimulating measures.
Markit Economics also released a separate report today in which UK construction output in November contracted unexpectedly as a result of dipping confidence. Markit’s UK construction index fell from October’s figure of 50.9 to 49.3, despite economists forecasting a decline of just 0.4.
It wasn’t all bad news though as the ‘Olympic effect’ led to the BCC upwardly revising its growth forecast for 2012 to a contraction of 0.1 per cent. It also trimmed its unemployment estimates, cutting 10,000 off the prediction for 2013.
Meanwhile, the British Retail Consortium asserted that in November like-for-like sales increased by 0.4 per cent from a year earlier.
As of 13:40 pm
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The Euro to US Dollar exchange rate is currently trading at 1.3089
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