BRITISH Chambers of Commerce has raised its UK growth forecasts for this year and 2019 but emphasised the country’s economy is nevertheless set to remain among the worst-performing in the Group of Seven leading industrialised nations.
The business organisation raised its forecast of UK growth this year from 1.1 per cent to 1.4%, partly because of support for exports provided by strong global expansion.
British Chambers, which also cited slightly stronger-than-expected levels of consumer spending, raised its forecast of UK gross domestic product growth next year from 1.3 per cent to 1.5 per cent.
It predicts expansion of 1.6 per cent in 2020.
British Chambers said: “Despite the upgrades, UK GDP growth is set to remain well below the historical average throughout the forecast period. Our latest forecast also implies that the UK will remain among the worst-performing economies in the G7 until 2020 at the earliest.”
While forecasting buoyancy of exports, British Chambers cited its expectation that import growth would remain strong, with the contribution of net trade to GDP growth thus expected to be limited.
It said: “The UK’s export performance is expected to remain robust on the back of strong global growth, particularly in key markets such as the eurozone and US. With imports also likely to continue to grow at a good rate, the contribution of net trade to UK GDP growth over the near term is to be limited, particularly with little evidence of a sterling boost to the UK’s overall net trade position.”
British Chambers now forecasts the next increase in UK base rates will be a quarter-point rise in the second quarter of this year. It expects this to be followed by another rise in the first quarter of 2019. Rates were raised from a record low of 0.25% to 0.5% in November.
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