Ahead of this week's autumn statement and the expected cuts in growth forecast by the Office of Budget responsibility,The British Chambers of Commerce (BCC) has downgraded its prediction for UK GDP growth in 2011, 2012, and 2013.
The chamber says that growth will be minimal in the last quarter of this year, and the first two quarters of 2012 .
Thereafter,it expects gradual improvement, but UK growth is likely to remain weak by historical standards until the second half of 2013.
It has forecast growth of 0.9 per cent in 2011 (down from 1.1 per cent in its September forecast), 0.8 per cent in 2012 (down from 2.1 per cent), and 1.8 per cent in 2013 (down from 2.5 per cent).
As for unemployment the forecast envisages that total UK unemployment will increase from 2.62 million in July-September 2011, to 2.77 million by the end of next year a net increase of some 150,000 in the jobless total.
Interest rates will remain at 0.5 per cent until at least the fourth quarter of 2012, and then increase modestly, reaching 1.5 per cent by the end of 2013.
Commenting on the survey John Longworth, Director General of the British Chambers of Commerce, said:
“The challenges facing the UK economy have grown in recent months. Uncertainty surrounding the eurozone will delay a significant upturn in growth until late in 2012. We expect inflation to fall sharply, which is positive news for businesses and consumers, but we will be faced with rising unemployment for some time to come.”
“Despite our prediction of slow growth, there is no need for doom and gloom. The UK economy has the potential to recover and thrive. Our economic prospects will improve, but not overnight.