LONDON: Strong consumer spending and the performance of the dominant service sector have made Britain’s businesses increasingly confident about their prospects over the next two years, according to the British Chambers of Commerce.
In its quarterly health check of the economy, the BCC said it was upgrading its growth forecast for the next two years amid signs that its members were shrugging off international uncertainty and concerns about the outcome of the general election in May.
The BCC said it was now believed that national output would grow by 2.7% in 2015 and 2.6% in 2016 – up by 0.1 percentage point and 0.2 percentage points respectively. Growth in the first quarter of 2015 is predicted to accelerate from 0.5% to 0.7%.
Consumer spending is likely to be supported by the continuation of the UK’s ultra-low interest rates, which have been at 0.5% for the past six years. The BCC said it did not expect the Bank of England to start pushing up the cost of borrowing until the first quarter of 2016 at the earliest.
John Longworth, the BCC’s director general, welcomed the growth upgrade but warned of the dangers of the economy becoming too dependent on consumer spending.
