Yahoo Finance UK to see more balanced growth though household squeeze to persist for years, warns BCC
UK growth will become more balanced over the next three years, according to one of the country’s biggest business groups, as it warned that families faced a prolonged income squeeze amid rising prices.
The British Chambers of Commerce (BCC) nudged up its forecast for UK growth this year to 1.5pc from 1.4pc. It said business investment would edge into positive territory this year, with expected growth of 0.3pc in 2017, compared with a previous forecast for a contraction of 0.5pc three months ago.
Although challenges remain, businesses are anticipating higher sales, increased profits and staffing levels to rise, which is all very positive for the economy
Lloyds
The country’s manufacturing and construction sectors were also projected to boost output in the coming years, while export growth was expected to rise by 3.1pc in 2017, up from a forecast of 2.7pc three months ago.
It came as a separate survey by Lloyds Bank showed business confidence climbed to an 18-month high in the wake of the general election result, even as uncertainty over Brexit negotiations persists.
Tim Hinton, a managing director at Lloyds Banking Group, said: “Although challenges remain in recruiting both skilled and unskilled labour, businesses are anticipating higher sales, increased profits and staffing levels to rise, which is all very positive for the economy.”
The BCC expects business investment to remain “muted” in 2018 and 2019, while higher inflation is expected to outpace wage growth “over the next few years”.
The BCC said: “As a consequence, consumer spending, a key driver of UK growth, is forecast to remain persistently weak over the next few years.” The BCC also brought forward its expectation of interest rate rises to the start of next year, from the end of 2018 in its previous forecast, as concerns about keeping a lid on price growth grow at the Bank of England.
The cost of doing business in the UK is too high – and weighs on the investment, recruitment and growth capabilities of our firms
Adam Marshall, BCC
Adam Marshall, the BCC’s director general, said urgent action was needed to boost business confidence.
“The cost of doing business in the UK is too high – and weighs on the investment, recruitment and growth capabilities of our firms,” he said. “Companies are faced with significant currency fluctuations and rising upfront costs, and their growth efforts are hampered by skills shortages.”
The BCC said growth over the next three years would be “anaemic”, as it left its forecast for growth in 2018 unchanged at 1.3pc, and 1.5pc for 2019.
