BCC downgrades UK growth forecasts
The British Chambers of Commerce (BCC) has downgraded its UK GDP growth forecast from 2.6% to 2.4% in 2015; from 2.7% to 2.5% in 2016 and from 2.7% to 2.5% in 2017.
Weaker than expected net trade and manufacturing figures were the main reasons for the downgrades. However, the BCC believes the UK economy is set to continue expanding at a moderate pace, mostly driven by strong growth in the service sector and in consumer spending.
Key points in the forecast:
- The downgrade is mainly due to weaker than expected trade figures and a worse than predicted manufacturing performance, largely as a result of falling global prospects in recent months
- Lower than predicted actual GDP growth in Q3 2015 and downward ONS revisions of earlier estimates also contributed to the BCC’s downgrade
- Quarterly UK GDP growth is expected to average just over 0.6% per quarter from Q4 2015 onwards, in line with the economy’s long-term growth trend
- The service sector is forecast to grow by 2.7% in 2015; 2.9% in 2016 and 2.9% in 2017 (revised slightly from 2.8% in 2015, 2.9% in 2016 and 2.9% in 2017 in the previous forecast)
- The manufacturing sector is expected to contract by 0.2% in 2015, followed by growth of 0.7% in 2016 and 2.0% in 2017
- The first interest rate increase to 0.75% is expected in Q3 2016