BRITISH Chambers of Commerce has downgraded its medium-term forecasts for the UK, declaring the economy is “treading water” and there is no sign of a return to healthier expansion rates.

It said sterling’s fall in the wake of the Brexit vote had failed to lift growth.

British Chambers has cut its forecast of 2018 growth from 1.3 per cent to 1.2 per cent, way adrift of a long-term average annual rate put at about 2.75 per cent by Bank of England Governor Mark Carney. It has reduced its 2019 growth forecast from 1.5 per cent to 1.4 per cent.

British Chambers cited a weaker contribution from net trade and more subdued consumer spending growth, amid falling real wages, as the main reasons for the lower 2018 projection.

It said: “While the outlook for export growth remains unchanged, the rate of import growth is expected to increase, with little evidence that customers are switching from imported goods despite their rising cost.”

The 2019 downgrade reflects a lower contribution from net trade and weaker investment than forecast previously.

British Chambers has raised its growth forecast for this year from 1.5 per cent to 1.6 per cent.

Director general Adam Marshall said: “While some businesses report strong trading conditions, the UK economy as a whole is treading water, and there is no sign on the horizon of a return to healthier levels of growth.”