The British Chambers of Commerce has revised its growth forecast for 2013 and 2014 downwards in its latest economic forecast.
The BCC believes the economy will grow by 1 per cent during 2013, down from its earlier 1.2 per cent forecast. GDP growth in 2014 has been revised downwards from 2.2 per cent to 1.8 per cent.
However, the UK business trade body has upgraded its GDP growth forecast for 2012, the first upward revision taken by the BCC since March 2011.
For 2012, the BCC expects the economy to contract by 0.1 per cent, an upward revision from its earlier 0.4 per cent contraction prediction.
Lower growth in 2013 and 2014 is attributed to reduced growth globally and the prospect of further austerity measures.
The BCC says rebalancing of the UK economy towards net exports has been “disappointingly slow” in 2012 compared with 2011. Exports are expected to grow by just 0.2 per cent this year compared with a 2.1 per cent growth in imports.
BCC chief economist David Kern says: “Following the strong 1 per cent upturn in the third quarter of the year, GDP growth is likely to slow sharply in Q4 2012 to only 0.1 per cent, as the special factors that inflated Q3 growth unwind.
“We expect quarterly growth to increase gradually over the next two years, but we have to accept that it will remain modest and below-trend for some time. Although there will be a slow improvement over the medium-term, GDP will only return to its pre-recession levels at the end of 2014.
“With global growth remaining weak, the rebalancing of the UK economy towards net exports will still happen, but at a slower pace than we previously thought.
“UK GDP growth in 2013 and 2014 will have to rely more on household consumption. It is critical that further falls in inflation continue to ease the squeeze on disposable incomes and help to sustain domestic demand.”