The UK growth over the next few years is forecast to remain anaemic, the British Chambers of Commerce said Monday.
Nonetheless, in its Economic Forecast, the BCC upgraded its growth outlook for 2017 to 1.5 percent from 1.4 percent, citing strong global growth outlook. Moreover, lower sterling is likely to boost short-term export activity this year, the lobby said.
For the second quarter of 2017, the BCC projected 0.4 percent growth. Its expectations for 2018 and 2019 remained unchanged at 1.3 percent and 1.5 percent, respectively.
Consumer spending growth for 2017 was downgraded to 1.3 percent from 1.6 percent. As real wages are eroded by inflationary pressures, spending growth will slow to 0.9 percent next year, the BCC said.
Meanwhile, business investment was forecast to climb 0.3 percent instead of a 0.5 percent fall estimated previously. Investment growth was expected to remain muted at 0.5 percent in 2018.
Exports growth projection was upgraded to 3.1 percent from 2.7 percent but it was forecast to ease to 2.9 percent next year.
The lobby upgraded its inflation projections as rising cost of imported raw materials continues to filter through supply chains. Inflation of 2.9 percent was forecast for this year, peaking at 3.4 percent in the fourth quarter of 2017.
Inflation was expected to slow to 2.8 percent in 2018 and 2.5 percent in 2019. The previous forecasts were for 2.4 percent, 2.7 percent and 2.5 percent, respectively.
First increase in official interest rates, to 0.5 percent was expected in the first quarter 2018 – earlier than the prediction of fourth quarter of 2018 in the previous forecast.
“An earlier than required tightening in monetary policy could destabilize consumer and business confidence and push UK growth materially lower, particularly during this period of political instability,” Suren Thiru, head of economics at the BCC, said.
by RTT Staff Writer
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