BCC forecasting reduced economic expansion for 2011

News Article - 13 June 2011
Category: Business

The British Chambers of Commerce (BCC) has reduced its economic growth forecast for the UK, citing rising inflation and a squeeze on household incomes as defining factors for their actions.

The BCC now expects to see expansion of 1.3 per cent throughout 2011, compared to its previous estimation of 1.4 per cent.

Inflation stands at 4.5 per cent - more than double the Government target of 2 per cent which is one of the primary reasons for the BCC's amended growth prediction.

There is certainly great concern for British households with average pay rises only half the annual rate of inflation. Experts predict that this is merely part of the rebalancing of the national economy, reverting away from consumption and borrowing with a renewed focus on investment and export growth.

Spencer Dale, the Bank of England's chief economist, believes the UK is on the path towards sustainable economic recovery.

"The lower level of sterling should help to support this rebalancing of the economy and, moreover, I do expect inflation to start to fall in a year or two's time and that will also help to reduce some of the pressures," said Mr Dale.

Despite its revised forecast the BCC continues to back the Government in its efforts to reduce the national deficit with cuts to public spending.

BCC director-general David Frost indicated that economic growth is likely to gather momentum towards the end of the year, before strengthening further into 2013 influenced by higher exports and business investment.

Nevertheless, shadow Treasury Minister Chris Leslie believes the BCC's figures suggest the Government is making its spending cuts too quickly.

He said: "The British Chambers of Commerce are just the latest major organisation to downgrade their forecasts for economic growth in the UK, and continue to predict a rise in unemployment as deep cuts and tax rises start to kick in.

"Slow growth and more people out of work and on benefits will make it harder to get the deficit down."

Article keywords: British Chambers of Commerce, BCC, economic growth, inflation, Spencer Dale, Bank of England, economic recovery, David Frost, Chris Leslie

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