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The UK economy is poised for its worst calendar year of growth since 2009, according to the British Chambers of Commerce (BCC). In its quarterly economic forecast, the business group downgraded its outlook for UK economic growth for 2018 to 1.3% from 1.4%, and also cut its outlook for 2019 growth from 1.5% to 1.4%. Consumer spending, business investment and trade forecasts were downgraded.
Service sector growth to ‘slow to eight-year low’
The BCC expects service sector output growth to slow to 1.2% in 2018, which would be the weakest level since 2010. The report said that disappointing consumer spending is likely to hit consumer facing industries like retail and hospitality. The construction sector is forecast to come under significant pressure, slowing from 5.7% growth in 2017 to 0.7% in 2018. In an interview with IGTV, BCC’s head of economics, Suren Thiru said, ‘what is actually underlying the below average growth has been the failure to deal with some of those longstanding issues, so weak productivity, the imbalances in our economy, overreliance on consumer spending and services to drive growth’.
BCC accuses Bank of England of mixed messaging
This week the Bank of England (BoE) is widely expected to keep rates on hold, with a rate hike in August in the balance, according to market expectations. Thiru told IG, ‘during a period of both economic and political uncertainty, what the Bank of England should be doing is providing monetary stability’. He added that with growth and inflation coming down, ‘the case for increasing rates is really limited at the moment’ and accused the central bank of ‘sending out mixed messages’.