Fresh calls for the Government to do more to stimulate the economy were issued yesterday after a lobby group again cut UK growth forecasts.
The British Chambers of Commerce (BCC) said GDP will grow by 1.1% in 2011, whereas it had expected 1.3%, while next year's figure was cut to 2.1% from 2.2%.
It is the third time the 2011 forecast has been cut this year as the BCC had expected the economy to grow by 1.9% at the start of the year.
The BCC warned that the rebalancing of the economy towards exports and business investment was not happening fast enough and urged the Government to help businesses by improving the infrastructure and cutting red tape.
BCC director general David Frost said: "The Government is right to reduce the deficit but these measures must be matched by policies to stimulate growth.
"The rebalancing of the economy towards net exports and investment is not yet happening at an adequate pace.
"If we don't get these policies right, we risk any recovery being weak and short-lived."
The body also suggested that if weak growth persists, more money could be pumped into the economy through another round of quantitative easing or laws forcing banks to hold more capital could be relaxed to boost lending.
It cut its forecasts after slower than expected growth in the second quarter of 2011 and the recent weakening in the global economic recovery.
It follows similar downgrades from the Bank of England, National Institute of Economic and Social Research and business body the CBI.
Inflation will average 4.4% this year but will still be at 3% in 2012, whereas a rate of 2.7% had been expected.
Unemployment is now forecast to continue rising to hit 2.62 million in the final quarter of 2012 whereas the body had previously thought the jobless figure would peak at 2.6 million in the second quarter of the year.
The slower growth will hit the Government's tax income and increase its benefits bill, causing Chancellor George Osborne to miss the deficit reduction targets set by the Office for Budget Responsibility by some £5bn, it predicted.
But the BCC warned against "unjustified gloom" about the UK's economy, saying that while near-term growth would be gradual, the economy.