LONDON (MNI) – UK growth will be almost flat this year but should
rebound in 2013, according to the British Chambers of Commerce.
The BCC predicts that UK GDP will grow by a mere 0.1% in 2012,
which is 0.5 percentage points down from its previous 0.6% prediction
back in March but it has raised its 2013 forecast to 1.9% from 1.8%. The
BCC’s 2012 forecast is below consensus, of 0.4% according to the latest
Treasury survey, with its 2013 forecast a shade above.
The BCC says the negative numbers in Q1, with the official data
showing GDP falling 0.3% on the quarter, will not be revised anytime
soon and due to June’s Bank Holiday and Diamond Jubilee celebrations Q2
is not expected to look much brighter. The BCC believes growth in Q2
will be zero, possibly falling into minus figures.
For 2013 things look better, with the BCC’s 1.9% forecast
reflecting inflation falling and people spending more. In 2014, GDP is
expected to rise even further. The average growth rate two years from
now is seen rising to 2.3%.
Owing to current economic uncertainties both in the UK and
globally interest rates will remain low for at least another year, the
BCC says. It says, however, that more liquidity injections in the form
of quantitative easing are unlikely.
Depending on how events unfold in the Eurozone, however, the BCC
does not rule out further QE.
In order to strengthen the UK economy, the BCC advises the
government to use its hard won credit in the financial markets and “to
spend more on pro-growth policies” as there is a risk of the current
economic stagnation damaging long term productivity potential.
The BCC calls for a Stg5 to 6 billion fiscal stimulus – which would
be small beer as it would amount to less than 0.5% of GDP.
–London newsroom: 00 44 20 7862 7491; email: sarah.mewes@ntkn.com
[TOPICS: MABDS$,M$B$$$]