The British Chambers of Commerce (BCC) has announced a slight improvement in their forecast for the overall economic growth rate for 2023.
However the upgrade to 0.4 per cent is marginal – and the Chambers predict growth hovering at close to zero for the next three years.
Figures show that the UK economy remains on course to avoid a technical recession – but economic activity will remain very weak for the immediate future.
The BCC forecast for 2023 has been revised to 0.4 per cent from 0.3 per cent in the previous assessment.
However Gross Domestic Product growth in both 2024 and 2025 has been downgraded from 0.6 per cent and 1.0 per cent to 0.3 per cent and 0.7 per cent respectively.
The downward adjustment takes into account the impact of inflation and interest rates on disposable income, household spending and overall business investment.
Interest rates are set to peak at 5.5 per cent and ease only slightly in 2024 to 5.25 per cent before dropping to 4.5 per cent in 2025.
The inflation rate is still expected to slow to 5.0 per cent in Q4 2023, but take longer to return to the per cent target, only reaching it in Q4 2025.
BCC surveys show that business confidence is levelling off after a more promising start to this year, and a record number of organisations are experiencing recruitment difficulties.
Commenting on the forecast, Vicky Pryce, Senior Member of the BCC Economic Advisory Council, said: “The BCC’s latest forecast shows the UK economy is continuing to teeter on the edge of a recession.
“But the fact is, that with growth predicted to hover so close to zero for three years, it will still feel a lot like one for most people and businesses.
“The impact this will have on consumer spending, coupled with a poor trade performance, will only generate more uncertainty for firms.
“The Bank of England’s own forecasts take a similarly dour view, so firms will be watching closely to see how this feeds into decision-making around interest rates.
“There is currently little on the table to provide companies with any crumbs of comfort. As we head towards an election next year, politicians will have to show how they will work with the business community to find solutions.”
