The UK’s economic growth forecasts has been cut by the British Chamber of Commerce amidst weak performance of the trade and manufacturing sector.
It was reported by the BBC that the business lobby group has cut its growth forecast for 2015 to 2.4% from 2.6%, as well as lowering its forecast for both 2016 and 2017 to 2.5% from 2.7%.
The manufacturing sector has been hit by “falling global prospects” according to the BCC and it is expected to contract this year.
Director general at the BCC, John Longworth, commented: “Our persistently weak trade performance and current account balance are impacting our overall growth.”
It said that the biggest contributor to the downgrade was slowing growth in the third quarter. Official figures in November showed a 0.5% growth between July and September, showing a slowdown from the 0.7% rate in Q2.
Mr. Longworth has warned that there is “still a long way to go” before the UK sees full recovery and said that UK growth is being fuelled by debt, which was behind the rise in consumer spending and asset prices.
The services sector has also seen a growth forecast cut by the BCC, which contributes 70% of GDP, it said that the UK could not “rely so heavily on consumer spending to fuel our economy.”
Mr. Longworth said on BBC Radio 5 live’s ‘Wake Up To Money’ that “if it’s based on debt you then lead to a boom-and-bust cycle again.”
He continued to say that at the last parliament, the Government said it would rebalance the economy towards manufacturing and exports, however the export growth plan had been a failure.
The BCC also expects interest rates to rise once again in the third quarter, they have been at 0.5% for over six year.
Mr. Longworth has warned that this will leave individuals and businesses exposed once interest rates rise eventually.
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