NEWS12 September 2016

BCC downgrades UK growth forecasts

UK – In its first economic forecast since the EU referendum, the British Chambers of Commerce (BCC) has downgraded its UK GDP growth forecast from 2.2% to 1.8% for this year.

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Looking further ahead, 2017’s GDP growth forecast has been decreased from 2.3% to 1.0% and 2018’s from 2.4% to 1.8%.

It said the main reasons for the downgrade were weaker consumer spending and a large fall in investment.

Although uncertainty surrounding the UK’s long-term political arrangements with the EU, as well as the timeline over which any actions will take place, are expected to dampen growth prospects towards the end of 2016 and over 2017, the BCC expects the UK to avoid going into recession.

The downgrades to the BCC’s forecast for UK GDP growth mean the UK economy will be £43.8 billion smaller at the end of the forecast period than previously predicted.

It also expected a further cut in interest rates by the end of 2016.

Dr Adam Marshall, acting director general of the British Chambers of Commerce, said: “Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead.

“The value of sterling, the shape of future trade relationships, the status of EU nationals in the UK workforce and other factors will all influence business confidence over the coming quarters. Stability, clarity and action must continue to be the watchwords for government. Aside from a clear timetable for negotiations with the EU, ministers must act to support business investment and confidence.”

Marshall added that government should start with business-boosting infrastructure projects that have been put on hold – including a firm decision on a new airport runway, new nuclear investment, and road and rail schemes.