BCC forecasts low expectations prior to pre-budget report

The British Chambers of Commerce (BCC) has published its latest economic forecast prior to the Chancellor’s Pre-Budget Report.

The BCC has revised its forecast to show that although gross domestic product (GDP) expectations for 2009 and 2010 aren’t as high as expected, previous predictions of a significant rise in unemployment is expected to be, at its maximum, 3 million by September 2010.

It has also predicted that the GDP will see an overall drop of 4.6% in 2009 but should see some positive growth over 2010 and 2011.

The report goes on to state that the UK’s financial position is an unsustainable model in the medium-term with public debt predicted to grow to dangerously high levels. It’s believed that fiscal tightening, such as spending cuts and tax increases are the methods that should be utilised to reduce the debt. 

The BCC went on to say that despite a £200 billion Quantitative Easing (QE) programme, bank lending remains consistently weak. With the fear of a double-dip recession additional economic stimulus and measures to boost lending are needed for a sustainable recovery.

The Director General of the BCC, David Frost, stated that we need our small business sector to be prosperous, and therefore it’s vital that the pre-budget report avoids new business taxes and higher national insurance contributions, or anything that could damage investment, growth and job creation. He went on to add:

“Reform of the public sector must be the cornerstone of a credible plan to reduce spending. Freezing public sector pay and reforming pensions must be part of that plan, and action in these areas should start now.”