Economic lift as chambers upgrade growth forecasts

The British Chambers of Commerce (BCC) said it expects output to increase by 0.9 per cent this year, up from a previous prediction for growth of 0.6 per cent after better-than-expected progress at the start of the year and a strong recovery in the services sector. Earlier this year the BCC had cut its forecast for growth in 2013 from one per cent. It also lifted its forecast for gross domestic product (GDP) for 2014 – raised from 1.7 per cent to 1.9 per cent – and 2015 – up from 2.2 per cent to 2.4 per cent.

A BCC spokeswoman said it was the first time forecasts for three years had all been increased since before the financial crisis in 2008. But the body, which represents 104,000 business members with more than five million employees, warned that the pace of improvement was still poor and called for measures to boost capital investment.

BCC director general John Longworth said: “The upward revision in our growth forecasts is encouraging. Unfortunately, this does not change the fact that economic growth is still too weak and the pace of recovery will remain unduly slow for a while yet.”

The upgrade comes after the UK avoided a feared triple-dip recession with growth of 0.3 per cent in the first quarter.

The BCC now expects to see 0.3 per cent improvements in the second and third quarter, with 0.4 per cent in the last three months of the year and 0.5 per cent per quarter during 2014. It said while growth would remain modest until 2015, there would be a gradual medium-term improvement.

The powerhouse services sector, which represents the bulk of the economy, is likely to outperform other areas, it added.

The outlook boost comes in the wake of mixed views elsewhere.

The Bank of England recently forecast growth being a little stronger, while the Organisation for Economic Co-operation and Development cut its prediction from 0.9 per cent to 0.8 per cent for the year.

Mr Longworth stressed that the BCC had always believed fears of a triple-dip recession were misguided and pointed to claims that GDP statistical revisions may eventually show there was not even a double dip. However he added: “We are still a far cry from getting the economy fully back on track.

“The UK is, and will for some time, be performing below its potential and we can do so much better.

“But the government must step up its efforts to create the right conditions for an environment that supports enterprise, as this will help more businesses to create jobs, invest, export and ultimately, grow.”