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Business group predicts decline in GDP growth
UK gross domestic product (GDP) will grow to 2.2% in 2011 but will decline in the medium-term, the British Chamber of Commerce has predicted.
The BCC’s latest Economic Forecast raises expectations for UK GDP growth to 1.7% for this year, and to 2.2% for 2011.Despite the positive short-term forecast though, the pace of growth will slow sharply over the medium-term as the government’s tough deficit-reduction measures take effect, according to the report.
David Frost, the BCC’s Director General, said: “British business appreciates that sacrifices will have to be made in the next few years, as the tough but necessary austerity measures begin to bite.”
BCC Chief Economist, David Kern, added: “Recent improvements in the UK labour market mask worrying developments, which pose serious threats to Britain’s productive potential. Unless the labour market remains flexible during the recovery, and private sector employers are encouraged to expand, there is a risk that falling productivity would damage Britain’s medium-term growth prospects.“
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