Call for action to stimulate UK growth

The government was urged to do more to stimulate the economy yesterday after a business lobby group again cut its UK growth forecasts amid the growing economic gloom.

The British Chambers of Commerce (BCC) forecast GDP would expand by a feeble 1.1 per cent in 2011, down from an earlier forecast of 1.3 per cent. The BCC also cut its growth forecast for next year to 2.1 per cent from 2.2 per cent.

At the turn of the year, the group had expected the economy to grow 1.9 per cent and the latest downgrade follows a flurry of recent disappointing economic data. The BCC warned yesterday that the rebalancing of the economy towards exports and business investment was happening too slowly, and urged the government to help businesses by improving the infrastructure and cutting red tape.

Director-general David Frost said: “The government is right to reduce the deficit, but these measures must be matched by policies to stimulate growth.

“The rebalancing of the economy towards net exports and investment is not yet happening at an adequate pace. If we don’t get these policies right, we risk any recovery being weak and short-lived.”

The BCC also said that if the recovery remained weak, more money should be pumped into the economy through another round of quantitative easing.