Positive GDP growth predictions not set to last, according to the British Chambers of Commerce (BCC).
The UK’s GDP is set to grow by 2.1 per cent this year, according to a new forecast from the BCC
The business body adjusted their prediction from the 1.8 per cent rise they set three months ago. Despite this more optimistic forecast, including a rise from 1 per cent to 1.1 per cent for growth in 2017, this would still be the weakest growth since the financial crisis.
It is also predicted that 2018 will see growth slow dramatically. 2018 has seen a drop from the originally proposed 1.8 per cent growth down to 1.4 per cent. The BCC attribute their prediction of future sluggish growth to to weak pound, which is expected to push up import cost.
The BCC suggests that inflation will hinder business investment. This is expected to fall by 0.8 per cent in 2016, and a further 2.1 per cent by 2017. The report also noted that inflation will breach the Bank of England’s 2 per cent target for 2017.
Inflation is also set to further curb spending power and household consumption. Spending power has been curbed since the results of Brexit earlier this year, with footfall to bricks and mortar retailers falling 1 per cent in November. The allure of Black Friday sales proved unable to sufficiently boost footfall, and the 1 per cent drop follows a 0.9 per cent drop in October.
The report has been welcome news for many, presented a stronger performance than expected in the wake of Brexit. The forecasters predict that we will avoid a recession, providing many with an optimistic outlook for the coming year. Although the British economy is stable for now, it is warned that this cannot last.
Twitter has seen commentary from many surrounding the forecast, with some users criticising the BCC for their neutrality surrounding Brexit, whilst others use the report to champion the importance of specific issues such as championing small businesses.
@britishchambers sustainable growth depends on boosting business investment and exports. #bccforecast #chambermanifesto
— Sukhdeep Dhillon (@SukiDil) March 11, 2015
If you want to know why May should publish a Brexit plan, listen to the British Chamber of Commerce who said uncertainty will dampen growth
— Edward Hardy (@EdwardTHardy) December 12, 2016
Representing over 100,000 business in total, the group incorporated new figures from the British Retail Consortium and Springboard to inform their updated forecast.