BCC cuts UK growth forecast amid fears of global slowdown
The British Chambers of Commerce (BCC) has slashed its forecast for the UK economy amid concerns over weakening global growth.
The influential business group has downgraded its growth forecast for UK Gross Domestic Product (GDP) from 2.5% to 2.2% in 2016; 2.5% to 2.3% in 2017 and has predicted growth of 2.4% in 2018.
The body also pushed back its prediction of when the Bank of England will increase interest rates, pencilling in a hike from 0.5% to 0.75% in fourth quarter of this year instead of the third.
The group made the downbeat predictions after seeing "weaker-than-expected growth across most areas of the economy, reflecting a general global slowdown".
It said lower-than-predicted economic growth in the fourth quarter of last year, coupled with downward revisions for the first three quarters of 2015, also led to the downgrade.
Dr Adam Marshall, acting director-general of the BCC, said: "Our forecast should stand as a wake-up call. The UK economic performance is reasonably good when measured against our main competitors, but it's only mediocre when compared against the long-term trends."
He added: "Our trade deficit remains too high, and is not forecast to improve substantially over the next three years. In turbulent times, a consistent focus on improving infrastructure, sweeping away barriers to business investment, and supporting exporters would be a real recipe for success."
The BCC also predicted services sector output to grow by 2.6% this year, while manufacturing, construction and industrial output are all expected to edge up by 0.5%.
David Kern, BCC chief economist, added: "Worsening global trends will present the main dangers for the UK economy over the next few years. Given the unacceptable size of the current account deficit, failure to achieve a meaningful improvement in net exports will make the UK vulnerable to speculative attacks, and our credit rating could be put at risk."
The Office for National Statistics (ONS) confirmed in February that the wider economy grew by 0.5% during the fourth quarter of 2015 in its second estimate of GDP.
It came after the Bank of England slashed its growth forecasts for the UK economy and kept interest rates on hold at 0.5% amid a backdrop of market volatility and fears over slowing global growth
It cut its forecast for UK GDP for the next three years, to 2.2% for 2016, 2.4% in 2017 and 2.5% in 2018.
The BCC director-general John Longworth stepped down after stating that he wanted Britain to leave the European Union. He said he had breached the BCC's neutral position on the EU.