BCC cuts UK growth forecasts on weak trade and manufacturing

The British Chambers of Commerce cut its outlook for UK growth this year and beyond, as it pointed to recent weak trade and manufacturing figures.

The business lobby group downgraded its UK gross domestic product forecast for 2015 to 2.4% from 2.6%. It also cut its estimates for 2016 and 2017 to 2.5% from 2.7%.

“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,” it said.

Lower-than-predicted actual GDP growth in the third quarter and downward ONS revisions of earlier estimates also contributed to the BCC’s downgrade.

The group said quarterly UK GDP growth is expected to average just over 0.6% from the fourth quarter onwards, in line with the economy’s long-term growth trend.

The service sector is forecast to grow by 2.7% this year, and 2.9% in 2016 and 2017.

The BCC said 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, while the first interest rate hike to 0.75% is likely to occur in the third quarter of next year.

John Longworth, director general of the BCC, said: “Official data is starting to reflect what our Quarterly Economic Survey has been showing all year – that our persistently weak trade performance and current account balance are impacting our overall growth. Similarly, the manufacturing sector has been hit badly by falling global prospects, tipping an earlier prediction of growth in 2015 to an expected contraction.

“We cannot rely so heavily on consumer spending to fuel our economy, especially when driven by increased borrowing. We have been down this path before, and know that it leaves individuals and businesses exposed when interest rates do eventually rise.”