The BCC’s quarterly economic forecast, published this week, predicts UK GDP growth of 1.3% in 2011 and 2.2% in 2012, down from the respective 1.4% and 2.3% forecasts it outlined in March.
CPI inflation forecasts, meanwhile, have been raised: the BCC expects CPI to stand at 4.5% in 2011, up from a March estimate of 4.2%, with the 2012 CPI forecast rising from 2.3% to 2.7%.
The BCC said its 2012 GDP forecast had been lowered because of its higher expectation and interest rate expectations, but chief economist David Kern struck an optimistic note.
“Although we have reduced our growth expectations, our forecast conveys a positive message overall. A new recession is unlikely, and while growth will initially be slow, it will stay in positive territory. The recovery will gradually gather momentum from the fourth quarter of 2011 onwards, with growth strengthening further in 2013,” Kern said.
“We are expecting interest rates to increase from August 2011, but at a faster pace that we envisaged in March. We are now predicting that the Bank of England rate will reach 1% by the end of 2011, and 2.75% by the end of 2012,” the BCC said in its report.
