Business Chambers of Commerce downgrades long-term domestic growth forecast
A business group has downgraded its forecast for UK growth this year in what it said was a warning sign in the struggle to achieve a sustained recovery.
The British Chambers of Commerce (BCC) expects gross domestic product (GDP) to increase by 3% for 2014, down from a previous outlook of 3.2%.
It would still be the best growth since before the recession but has been cut from the previous forecast because of weaker than expected performances from the dominant services sector as well as household consumption and exports, the BCC said.
The third quarter performance of the economy, when it grew by 0.7%, was weaker than it expected and a slowdown from 0.9% in the second quarter.
The BCC also downgraded its forecast for 2015 from 2.8% to 2.6% and for 2016 from 2.5% to 2.4%.
Director general John Longworth said the 2014 figure would still put Britain ahead of international competitors for growth this year. But he added: "Downgrades to our growth forecast are a warning sign that we still face a number of hurdles to securing a balanced and sustainable recovery.
"A number of headwinds from the global economy are also having a real impact on British businesses.
"The eurozone is weak, with a real risk of deflation, growth in emerging markets has slowed and political uncertainty in Ukraine, the Middle East and elsewhere is affecting business and consumer confidence.
"Uncertainty in the economy generally affects confidence, as does the spending and debt cycle.
"Our dependence on consumer spending and mortgages means that the UK economy is particularly sensitive to interest rates. Any short-term rate rises could present a huge risk to our economy."
The BCC has pushed back its expectation for an interest rate hike to the third quarter of next year.
Chief economist David Kern said: "In the short term, the main concern for the UK is a continuation of the slowdown in recent months."