THE British Chambers of Commerce has cut its prediction for UK economic growth to 0.6% from 0.8%, suggesting a slowdown from 2011 although the business group believes a double-dip recession will be avoided.
It is also expecting an increase of 230,000 thousand in the UK's ranks of the unemployed to 2.9 million with more than four out of 10 of the UK's youngest workers expected to be without a job.
Meanwhile, the BCC called for a £4 billion injection into the UK economy to boost growth as public sector borrowing is set to come in below expectations.
The UK economy contracted by 0.2% in the last quarter of 2011 and the BCC expects a rebound in the current quarter followed by a fall-back in the next three months due to the extra bank holiday for the Queen's diamond jubilee .
In all it anticipates growth of just 0.2% to 0.4% in total for the first two quarters of 2012.
Growth will then improve from the second half of 2012 and the UK should be on course to record growth of 1.8% in 2013, it said, although this remains the long-term trend.
John Longworth, director general of the BCC, said: "With one quarter of negative growth behind us, growth will be slow in 2012, but we believe a recession will be avoided."
He added: "The Chancellor must pull out the stops to enable British businesses to drive growth here at home."
The ranks of the unemployed are expected to grow by 230,000, taking the total to 2.9 million, or 9% of the workforce, in the first quarter of 2013, up from 2.67 mil-lion in the latest official figures.
The BCC expects unemployemnt in the 16 to 17 age group to total 223,000, a jobless rate of 41% by early 2013. For those aged between 18 and 24 unemployment is expected to hit 23% towards the end of this year, equivalent to 850,000 people without a job.
However, its public sector borrowing forecast is more optimistic than official predictions at £119.3bn for 2011/12, some £8bn below the total anticipated by the Office for Budget Responsibility (OBR) in November.
David Kern, BCC chief economist, said: "With public sector borrowing likely to undershoot the OBR forecast by approximately £8bn, a fiscal stimulus totalling some £4bn would be consistent with maintaining strong UK market credibility and would not endanger our AAA credit rating."
Consumer Prices index inflation will average at 2.7% in 2012 this year and 1.9% in 2013, after 4.5% in 2011.
The BCC expects interest rates to remain at 0.5% until the final months of 2013 and then rise modestly.
Mr Kern said: "We expect official interest rates to remain at 0.5% until the final months of 2013, and then rise modestly to 1% in Q2 2014.
"The Quantitative Easing (QE) programme is likely to be maintained at its current level £325 billion until at least Q4 2013."