The UK economy is set to grow at a slower rate in 2011 than was previously anticipated, according to projections released by the British Chamber of Commerce, which forecast growth of just 1.9% over the twelve month period.
The fresh forecasts represent a downwards revision of 0.3% from just two months previous, where the BCC had anticipated growth figures in line with those published by the OBR and underlines a growing pessimism amongst business organisations as to the medium-term outlook for the UK economy.
Citing the impact of public sector spending cuts and rising VAT rates, the British Chamber of Commerce said that while the outlook for 2011 was to be less generous than it had previously thought, economic growth over 2012 would come in at a stronger rate than expected as the private sector continues to grow and strengthen the UK’s overall economic recovery.
The BCC was responding to the independent Office of Budget Responsibility figures issued earlier, which revised slightly downwards its growth forecasts for 2011 to 2.1%, while suggesting that 2012 would see economic growth of some 2.6%.
Meanwhile, the BCC suggested that unemployment would fall to as low as 2.6million in 2012 as the benefits of a steeper economic growth curve take hold.