Britain will narrowly avoid a triple-dip recession, says BCC
The British Chambers of Commerce has revised down its growth forecast of the UK economy for 2013 and next year citing unexpected decline in the fourth-quarter GDP and worsening global growth prospects.
BCC has cut its growth forecast for the year to 0.6 percent from the earlier prediction of 1.0 percent, and 2014 forecast to 1.7 percent from 1.8 percent.
Nevertheless, it expects the UK growth to improve over the medium term, reaching 2.2 percent in 2015.
BCC's prediction compares to the official forecast for 1.2 percent growth in 2013 and 2 percent in 2014. Business lobbying organisation Confederation of British Industry (CBI) predicts that the country's gross domestic product (GDP) will rise by 1 percent this year, while the Organisation for Economic Co-operation & Development (OECD) expects an increase of 0.9 percent.
"Businesses are resilient and have the ambition needed to drive our national recovery forward, but reduced global growth prospects, and the ongoing need to repair Britain's balance sheet, will slow the pace of the UK recovery over the next couple of years," BCC said in a statement.
The cut in growth forecasts comes as the Bank of England is due to make its latest interest rate decision. Any change in interest rates, which are already at their record low level for four years, is unlikely given the low-growth situation.
However, the central bank may expand its quantitative easing programme.
BCC expects a £50bn ($75bn, €58bn) increase in the programme, but noted that any increase would be "unnecessary" and "risky".
It added that the country will avoid triple-dip recession by recording a growth rate of 0.1 percent in the first quarter of 2013, and called for decisive action in the upcoming budget.
"This requires a focus on implementing measures that will boost growth, such as the movement of the business bank from rhetoric to reality, increasing the availability of access to finance, and delivering key infrastructure projects that will raise the confidence of businesses on the ground," said John Longworth, BCC director general.
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