10/08/11

  • Bank Governor downgrades growth forecast for 2011 to 1.4%

Commenting on the quarterly Inflation Report published today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“The new Inflation Report highlights the difficult circumstances facing the UK economy over the next two years. The MPC has downgraded its growth forecast, but we believe this is still too optimistic. It is unlikely that annual GDP growth in the fourth quarter of this year will increase to two percent, and the pace of economic expansion predicted for 2012 also seems high. However, we agree that growth will remain in positive territory and there will be no double dip recession.

“This prediction is broadly in line with our own; that after rising further in the near term annual inflation will fall steadily during 2012. The forecast by the Committee implies that interest rates will remain at their current low level for an extended period, possibly beyond the second quarter of next year. Given the expected low growth and the squeeze facing businesses and consumers, it is important that interest rates remain low for as long as possible.

“The MPC was right to emphasise the worsening international background and the importance of supporting growth. But the government must play its part and continue to implement growth enhancing policies at this critical time for the UK economy.”

Ends

Notes to editors:

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people.

Media contacts:

Liz Larvin
Tel: 020 7654 5813 / 07825746812
Email: l.larvin@britishchambers.org.uk

Lisa Morrison
Tel: 020 7654 5812 / 07717682221
Email: l.morrison@britishchambers.org.uk