BCC upgrades 2017 UK growth forecast, lowers 2018Staff Writer | March 15, 2017
The British Chamber of Commerce (BCC) has upgraded its growth forecast for the British economy in 2017 following stronger-than-expected consumer spending, but maintained a flat outlook in the medium-term.
Britain Construction has been upgraded to 0.4%
However, it expects the economy to slow to 1.3% in 2018, from an initial forecast of 1.4% before rising slightly to 1.5% in 2019.
The BCC joins other bodies which have raised their growth outlook for the country this year, the Bank of England revised up its forecast to 2% from 1.4% last November and is similar to a revision by the Office for Budget Responsibility.
The OECD now forecasts 1.6% growth in 2017 from 1.2% last November, while the International Monetary Fund expects 1.7% growth from 1.4% previously predicted.
The BCC's upgrade was driven by these official upward revisions to GDP growth in the final quarter of 2016 and stronger-than-expected levels of consumer spending, as well as a slight improvement in the outlook for investment and trade, compared to the body's previous forecast.
But the BCC expects economic growth to remain well below its long-term average over the forecast period due to a slowdown in consumer spending from 1.6% in 2017 to 0.9% in 2018 and 1.1% 2019 as pressure from inflation erodes real wages.
Inflation is predicted to breach the BoE's 2% target this quarter after which the BCC said it will be passed onto consumers as companies will face higher input costs.
The country's net trade position is expected to improve over the next few years as the BCC upgraded export growth to 2.7% in 2017 from 2.3%, and to 3.1% in 2018 from 2.9%. It is expected to grow 2.8% in 2019.
For sectors, construction has been upgraded to 0.4% in 2017 from -2.0% and is expected to grow 0.2% in 2018 and 1.0% in 2019.
Services is forecast to grow 1.9% in 2017, 1.5% in 2018 and 1.7% in 2019, while manufacturing is to expand 1.2% in 2017, 0.7% in 2018 and 1.0% in 2019. ■