In the light of new government growth figures, the British Chambers of Commerce (BCC) has upgraded its forecast for the UK's short term economic prospects but has warned that interest rates must be kept close to historic lows to ensure the recovery.
It also warned that the rate of growth will probably slow sharply when the impact of the comprehensive spending review [CSR] due in October, finally kicks in towards the end of the year.
BCC expects gross domestic product (GDP) to grow by 1.7% this year and by 2.2% in 2011 – an upgrade from earlier predictions of 1.3% and 2.1% respectively.
Official figures released on Friday by the Office for National Statistics [ONS] said that UK GDP grew 1.2% in the second quarter of 2010 - greater than had been predicted largely down to a boost from a strong construction sector.
This represents the fastest rate of quarterly expansion recorded for nearly a decade but most economists do not expect this level of growth to continue.
ECONOMIC PARTNERSHIP COMMENT
Although this is ostensibly good news it is almost certainly a one-off as a result of government pump-priming and firms replenishing stocks.
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British Chamber of Commerce
Office of National Statisitics