UK 'must export more for growth'
Britain needs to invest and export more to prevent its world-leading growth being a flash in the pan, a leading business group said today.
The British Chambers of Commerce (BCC) upgraded its growth forecast from 3.1% to 3.2% this year and from 2.7% to 2.8% in 2015, but more than halved its prediction on export growth in goods and services to 0.8% this year.
The upgrade to the BCC's GDP forecasts is due to a stronger labour market but, with interest rates due to rise from early next year, the lobby group is predicting a slight slowdown in the pace of growth from 2015.
BCC chief economist David Kern said: "To maintain our world-leading performance, we may have to look to other sources of growth.
"Greater efforts to boost exports and investment and avoiding premature interest rate increases will ensure that the recovery is sustainable and that the pace of growth can strengthen in the future."
For 2016, the BCC's GDP growth forecast remains unchanged at 2.5% but it warns that household consumption will slow to 2.2% from 2.9% this year.
The unemployment rate is forecast to fall from 6.4% in the second quarter of this year to 5.5% next summer and then 5% in 2016 and 4.9% by 2017.
BCC director general John Longworth said: " We are leading, rather than following, other major economies when it comes to short-term growth.
"Businesses up and down the country should be congratulated for their hard work and determination in driving the UK recovery despite a number of international and domestic challenges.
"The task at hand is to ensure that the stellar 2014 growth is not a flash in the pan. We need to invest and export more, innovate, and build.
"It is disappointing that we have downgraded export growth for the next two years as a strong international trade performance is key if we are to steer away from a reliance on consumer spending."
Mr Longworth also called on the Bank of England to give businesses the confidence they need to invest by keeping interest rates low for as long as possible.
"Any future rate rises must be gradual and modest," he added.