Monday, Aug 18, 2008
Britain’s economy will enter a recession within the coming year, the British Chambers of Commerce (BCC) has predicted.
In its latest quarterly economic forecast, the BCC said Britain was heading into a “technical” recession of two or more quarters of declining output over the next six or nine months. But a major recession similar to the downturn seen in the early 1990s was unlikely, the organisation said.
However, the BCC forecast that unemployment will climb by up to 300,000 over the next two to three years to nearly two million. It could even top the two million mark if conditions deteriorate.
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David Kern, the BCC’s economic adviser, said: “Our quarterly economic forecast highlights a significant worsening in UK economic prospects. There is now a distinct possibility of technical recession. The level of UK unemployment is likely to increase to nearly 300,000 over the next few years, reaching almost two million. An increase above two million cannot be ruled out.”
The main drivers of the UK slowdown will be a “very sharp” deceleration in consumer spending growth as households tighten their belts amid soaring bills and falling house prices, the BCC said. Another contributory factor will be much lower growth in UK investment spending thanks to rock-bottom business confidence.