Britain’s economy will shrink by 4.3 percent this year before recovering to grow by 1.1 percent next year, the British Chambers of Commerce (BCC) said yesterday in a quarterly update to its forecasts.
The projections are broadly in line with the trend in recent figures from the Organization for Economic Cooperation and Development and the IMF, which cut their growth estimates for Britain for this year and raised them for next year.
“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,” BCC chief economist David Kern said.
Unemployment was likely to rise to just more than 3 million by the middle of next year, equivalent to 9.6 percent of the workforce.
In June the BCC had forecast the economy would shrink by 3.8 percent this year before growing by 0.6 next year, and that unemployment would hit 3.2 million.
The business organization, which represents more than 100,000 firms employing 5 million people, said Britain needed to cut public spending in all areas apart from business infrastructure to avoid endangering its triple-A credit rating.
“Given the perilous state of our public finances, we cannot afford to ring-fence other spending categories, no matter how desirable it may be,” Kern said.
“It is vital that new business taxes, higher National Insurance contributions, and any measures that may damage enterprise and job creation are avoided,” he said.
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