LONDON (MNI) – The British Chambers of Commerce has cut its
forecast for UK growth this year to 0.6% from a previous estimate of
0.8%, while leaving its 2013 growth forecast unchanged at 1.8%.
In its latest set of economic forecasts, says that the UK will
avoid a double-dip recession, although the quarterly pattern of growth
this year will be volatile, with GDP seen growing only by 0.2-0.4% in
total over H1. The BCC’s 2013 growth forecast is in line with consensus,
while its 2012 forecast is a little above, but below the Bank of
England’s.
The Treasury’s compilation of independent forecasters shows the
average independent forecast was for 0.4% in 2012 and 1.8% in 2013,
while in its February Inflation Report the BOE predicted 0.9% growth
this year.
The BCC says that growth should see some improvement from H2
onwards and a return to more normal rates in 2013. Deleveraging will
depress demand and result in a relatively long period of low growth,
with exports and business investment seen as the main drivers going
forward.
The additional Bank Holiday for the Queen’s Diamond Jubilee in Q2
will depress quarterly GDP growth and the London Olympics in Q3 may also
distort the growth figures.
Growth is forecast by the BCC to be markedly stronger in 2013 and
2014 than in 2011 and 2012 and consumer spending, after falling by 0.8%
in 2011, is expected to record positive growth of 0.8% in 2012 and 1.7%
in 2013.
The BCC UK expects unemployment to rise from 2.67 million (8.4% of
the workforce) in October-December 2011, to 2.9 million (9.0% of the
workforce) in Q1 2013.
Weak growth prospects, both globally and in the UK, will make it
necessary to keep official interest at very low levels for much longer
than previously envisaged. Interest rates will remain at 0.5% until the
final months of 2013 and then see modest increases.
The BCC expects the BOE’s Monetary Policy Committee to maintain the
Quantitative Easing programme at its current level stg325 billion, and
reiterates its calls for the MPC to buy private sector assets as well as
gilts, although this latter call was dismissed, yet again, by Bank of
England Governor Mervyn King when he attended a hearing at the Treasury
Select Committee Wednesday.
–London newsroom: 00 44 20 7862 7492; email:
dthomas@marketnews.com
[TOPICS: MABDS$,M$B$$$]
