Recovery on track, firms say
THE UK economy is on the road to recovery but is still at risk of a “relapse”, the British Chambers of Commerce (BCC) said yesterday.
The BCC said in its September 2009 Economic Forecast that rallying stock markets, fiscal stimulus measures and sharp falls in sterling would support an initial upturn.
David Kern, chief economist at the BCC, said: “The upturn in the economy has probably already started and we could see a relatively strong bounce-back in the next few quarters. But sustaining the recovery will be very challenging and the risks of a relapse are high.”
Despite revising down its June GDP forecast for 2009 from a 3.8 per cent fall to a 4.3 per cent drop, the BCC increased its 2010 prediction from GDP growth of 0.6 per cent to 1.1 per cent.
Unemployment is set to increase but will rise at a slower pace to reach a peak of three million, or 9.6 per cent of the UK workforce, in mid-2010.
But the BCC warned that public sector borrowing would hit 12.5 per cent of GDP in 2009/10 and 2010/11, adding that the Bank of England was likely to extend its quantitative easing programme from £175bn to £200bn.
Kern also warned the UK’s international credit rating would be under threat unless measures were taken to curb fiscal deficits and debt in the medium-term.