The British Chambers of Commerce (BCC) has given an improved forecast for 2012, but still expects the economy to shrink – by 0.1%.
The BCC said the UK economy will shrink by 0.1% this year, less than the 0.4% contraction it had predicted previously.
Its latest economic forecast says the improvement is entirely due to the stronger-than-expected growth in the final quarter, partly a function of the successful London Olympic Games.
The main headlines of its forecast are:
- GDP growth forecast for the UK is upgraded for 2012, the first upward revision since March 2011.
- Growth forecasts for 2013 and 2014 have been revised down.
- The BCC says reduced growth globally and the prospect of further austerity measures will slow the pace of recovery in 2013 and 2014.
- Its unemployment forecast is 100,000 lower than in September, reflecting the stronger than expected performance of the UK labour market.
- The public sector borrowing forecast for 2012/13 is £104.1bn, around £12bn higher than the OBR forecast in March 2012.