Radical steps urged to boost UK economy

The British Chambers of Commerce said there was an “encouraging” pick-up in growth in the past three months which means the UK will probably dodge another recession but warned the economic expansion is still “much too slow”.

Its gloomy prediction for 2012 comes amid rising oil and food prices, which mean that inflation will fall less quickly than previously thought, while the eurozone debt crisis continues to hit confidence.

It forecasts that unemployment will rise to 2.9 million over the next year and said the Government needs to take “radical” steps to set businesses free, including creating a state-backed bank to boost lending to small and medium-sized enterprises.

Other suggested measures include scrapping this month’s 5.6 per cent hike in business rates.