August 30, 2013
The British Chambers of Commerce (BCC) has upgraded its UK GDP growth forecasts for 2013 and beyond in its Q3 economic forecast. However, the business group warns that while the upgraded figures are encouraging, the recovery is still not secure and many challenges remain.
The revised forecasts see the BCC predicting GDP growth of 1.3% in 2013 (up from 0.9%), 2.2% in 2014 (up from 1.9%) and 2.5% in 2015 (up from 2.4%). It also predicts that unemployment will fall to 2.450 million (7.5% of the workforce) in Q3 2014 – lower than it had predicted in May.
According to the BCC, there are three main reasons for the upward revision – the stronger than expected Q2 2013 GDP growth (0.7%), a strong service sector and household consumption. In addition, the improvement in the trade balance in Q2 is also a key factor. BCC reports that its own surveys have shown that export activity among its members is at record levels.
However, John Longworth, BCC director general, cautioned against complacency: "Unfortunately however the recovery is not yet secure. We have had false dawns in recent years and although this upturn appears to be on stronger ground, we must be aware that complacency could lead to setbacks. There are many external factors, such as the eurozone, the Middle East, and the Chinese economy that could halt our progress."
He added: "Our surveys have shown that firms are confident about their prospects and want to expand, but they cannot do it alone. The government simply cannot divert attention away from growth, and must adopt measures to foster an enterprise-friendly environment in which businesses can continue to create jobs, invest and export."
David Kern, BCC chief economist, said: "The new forecast signals an improvement in our economic prospects, but reducing the structural fiscal deficit continues to be a long and painful process. While we would like to see more growth coming from investment and net trade, we should not be too concerned that consumer spending is helping to drive the recovery – it is better to rely initially on the consumer than to have no growth at all."