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March 7, 2013 12:14 am
A British business trade body has cut its forecasts for UK growth for this year because of poor official data and worsening prospects in the eurozone.
The British Chambers of Commerce, which represents UK businesses, on Thursday downgraded its growth outlook for 2013 to 0.6 per cent, from an estimate of 1 per cent made in early December. The economy would, however, avoid a contraction in the first quarter of the year, forecast the BCC, avoiding a triple-dip recession.
The BCC’s forecasts are lower than official estimates. The Office for Budget Responsibility, the government’s fiscal watchdog, in December predicted the UK economy would expand by 1.2 per cent this year.
The BCC also forecast public-sector borrowing would be higher than official projections; it expects the government to borrow £89.7bn this year against the OBR’s figure of £80.5bn.
David Kern, chief economist at the BCC, said: “Our persistent fiscal challenges have contributed to the UK’s downgrading by Moody’s. Reducing the structural deficit, which remains unacceptably high, is proving a longer and more painful task than initially thought.”
However, the BCC deemed more money printing from the Bank of England on Thursday was unnecessary.
“Adding to quantitative easing should only be considered if new threats emerge to the stability of the UK banking system,” Mr Kern said.
“More QE would only provide marginal benefits to the economy, while heightening longer-term risks of financial distortions, bubbles and higher inflation.”
The BCC expects growth of 1.7 per cent next year, slightly lower than its last estimate of 1.8 per cent.
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