Chambers downgrade growth estimates

A LEADING business group has downgraded its forecast for the country’s economic performance this year.

British Chambers of Commerce said fter a weak start to the year the economy would grow 2.3% this year,  against its earlier forecast of  2.7%. It warned too over a “timebomb” regarding the trade deficit.

Director general John Longworth said: “While this slowdown will serve as a warning about the strength of our economic recovery, we believe the UK will secure steady growth in the years to come.”

The group said it expected a hefty pick-up in earnings over the next few years, and further declines in Britain’s unemployment rate But it warned the recovery has been too reliant on consumer spending, and highlighted Britain’s trade deficit as the most pressing worry.

The goods trade deficit widened in the first quarter of 2015 to nearly £30bn, highlighting one of the economic challenges facing the new government.

“The trade deficit is an economic time-bomb waiting to go off. We have to confront it head-on and that means getting more of our businesses exporting their goods and services overseas,” said Longworth.

The BCC pushed back by three months its forecast for the next Bank of England interest rate hike from a record-low 0.5% to the second quarter of 2016.

Last month, Bank of England Governor Mark Carney said last month it was “possible” that interest rates would be higher in a year’s time from now.