The BCC has today (30th May) announced that it has upgraded its growth forecasts for 2014/15 and that UK growth will reach a seven-year high in 2014.
With the highest rate of growth since 2007, the BCC has upgraded its GDP growth forecast for 2014 to 3.1% from 2.8%, the first time in seven years that it has reached beyond 3%. It has also upped its forecast for 2015 to 2.7% from 2.5%, although their 2016 remains static at 2.5%.
Growth in GDP is anticipated to lead to an increase in interest rates and the BCC predicts a rise of 0.75% in Q1 2015, much earlier than previously calculated.
Commenting on the ‘great news’, BCC Director General John Longworth urged caution and warned that ensuring long term growth prospects will require a good deal of work. Whilst celebrating recent strong growth in business investment, Longworth warned that it derives from a low base and to sustain future investment businesses require confidence from the Bank of England and the government.
Longworth stated that the BCC’s forecast confirms Britain’s position as a leader in short-term growth, over other major economies and that UK businesses should be congratulated for their success in times of adversity, but whilst celebrating this success, we should not lose sight of the hard work still ahead.
He believes it will be a challenge to ensure that “2014 is not ‘as good as it gets’ for the UK economy,” and urges businesses to do all in their power to prevent a slow down in future growth. Investment, innovation, export and development are all seen as vital for sustained investment momentum. The BCC also urges the Bank of England to maintain the official interest rate low for as long as it can and to ensure that when rate rises are necessary that they are modest and gradual.
“We have made far too much progress in recent years to simply accept that growth rates are permanently lower than they were before the financial crisis. To guard against that possibility, we need a real, long-term partnership between government and business – with ministers unblocking infrastructure, training and access to finance so businesses can commit to invest, create jobs and export. With the fantastic businesses we have in the UK, there’s no reason that a 3% growth rate should be the sum of our ambitions” concluded Longworth.