Further hopes of a strengthening economic revival emerged today as the British Chambers of Commerce (BCC) upgraded its short-term UK growth forecasts.
The organisation joins a growing list of forecasters to have raised their expectations in recent weeks, although it warned that the recovery “is not yet secure” and external factors such as the ongoing crisis in the Middle East could halt progress.
BCC director-general John Longworth urged the government to do more to help small firms and exporters, adding: “Although this upturn appears to be on stronger ground, we must be aware that complacency could lead to setbacks.”
With the UK’s dominant services sector continuing to outperform other parts of the economy, the BCC raised its forecast for GDP growth this year to 1.3 per cent, from its previous 0.9 per cent prediction.
It expects the recovery to accelerate to 2.2 per cent next year, rising to 2.5 per cent in 2015.
Chief economist David Kern said the Bank of England’s policy of “forward guidance” will help firms plan for investment, but the jobless rate could fall to 7 per cent sooner than the central bank’s monetary policy committee expects, triggering a rise in rates early in 2016.
Bank governor Mark Carney said on Wednesday that unemployment will “as likely as not” remain above 7 per cent in three years’ time.
The CBI earlier this month raised its growth forecast for 2013 to 1.2 per cent, from 1 per cent previously, while the Centre for Economics & Business Research pencilled in a rate of 1 per cent, up from 0.7 per cent.